Risk-Off mood deepens

Global markets kicked off the session with another heavy round of selling as sweeping U.S. tariffs—now totaling 104% on Chinese imports—officially came into effect. Hopes for last-minute diplomacy faded, locking in Beijing’s silence and reaffirming its resistance to Washington's hardline stance. The absence of any response from China has left traders on edge, fueling a broader move out of risk.

Commodities

Oil prices remain under intense pressure, with WTI crude dipping below $58, marking its lowest point since early 2021. The drop follows President Trump’s announcement of a 50% tariff escalation on Chinese goods, intensifying concerns about a prolonged trade freeze between the world's two largest oil consumers.

Energy markets are now watching OPEC+ closely, as rising supply commitments collide with falling demand expectations.

Gold saw renewed interest early in the session as trade anxiety and recession fears re-emerged. Spot gold rebounded modestly, speculation around multiple Fed rate cuts later this year may affect its move.

Still, rising yields remain a headwind. Investors will be watching the FOMC minutes for any clues about the Fed’s flexibility, especially with inflation data due later this week.

Currencies

In currency markets, the yuan slipped to levels unseen since 2007, with the PBOC guiding the currency lower for consecutive sessions. This gradual devaluation appears calibrated to soften the blow of tariffs on Chinese exports—but it’s also provoking sharp criticism from Washington.

The U.S. dollar, meanwhile, regained strength, benefiting from safe-haven flows and rising Treasury yields. However, this dynamic may shift quickly depending on the tone of today’s FOMC minutes, which could hint at the Fed’s tolerance for ongoing yield volatility.

What’s Next

The economic calendar may look quiet, but the FOMC minutes are anything but background noise. Markets are hungry for guidance—will the Fed validate dovish bets, or push back against expectations of aggressive easing?

In the meantime, the trade war narrative has moved from rhetoric to execution. The next wave of reaction may not come from statements—but from earnings, credit stress, and consumer pullback.