Stocks sink, bonds jump as Trump dents trade hopes

TRADE-ANALYSIS : Struggling to negotiate, Trump often claims countries are eager to talk

Here's what happens to markets if U.S. tariffs on China kick in Dec. 15

The S&P 500 index fell for a third day, though it pared some of its losses in afternoon trading. The morning

brought a flood of trade headlines that rattled markets, with the Trump administration signaling the U.S. plans to move forward with tariffs on Chinese goods if no deal is reached before the mid-December deadline. The president had earlier indicated he'd be willing to wait another year before striking an agreement with China. He also threatened levies on France after hitting steel from Brazil and Argentina.

Treasuries surged, driving yields down the most since August, as gold, the yen and the Swiss franc paced gains among haven assets. The cost to protect North American investment-grade debt against default jumped as trade-war induced volatility shook markets. Jefferies warned currency traders to buckle up before the tariff deadline, saying "put your helmet back on." 

The flurry of trade news roiled global markets just as investors started dipping their toes into riskier waters. A rush to assets that usually outperform during times of economic growth pushed U.S. stocks to record highs last month. But renewed tariff tension and signs of profit deterioration could make traders again more cautious amid the longest bull market on record.

"The narrative on trade has quickly been turned upside down as negative headlines on tariffs have ignited a risk-averse tone in the markets," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "Today's headlines are a short reminder of the downside risks that still remain across the investing landscape."

Chinese state media said Tuesday the government would soon publish a list of "unreliable entities" that could lead to sanctions against American companies. Meantime, France said the European Union would retaliate if the U.S. follows through on a threat to hit about $2.4 billion of French products with levies.

Elsewhere, oil rose as traders focused on the upcoming OPEC+ meeting that could lead to deeper supply cuts by some of the biggest crude producers.

Here are some key events coming up this week:

--Germany releases factory-order data for October on Thursday.

--Saudi Aramco's initial public offering is scheduled to be priced on Thursday, with Riyadh looking to raise more than $25 billion.

--Friday brings the U.S. jobs report, where estimates are for non-farm payrolls to rise by 190,000 in November.

These are the main moves in markets:

Stocks

--The S&P 500 dipped 0.9% to 3,085.23 as of 2:54 p.m. New York time. It closed at 3,093,20, or down 0.66%. Nasdag closed at 8,520.64 , down 0.55%. Dow Jones dropped 1.01 per cent to close at 27,502.81.

--The Stoxx Europe 600 index decreased 0.6%.

--The MSCI Asia Pacific index fell 0.3%.

Currencies

--The Bloomberg Dollar Spot index decreased 0.1%.

--The euro was little changed at $1.1081.

--The Japanese yen appreciated 0.4% to 108.59 per dollar.

Bonds

--The yield on 10-year Treasuries sank 11 basis points to 1.71%.

--Germany's 10-year yield slid seven basis points to -0.35%.

--Britain's 10-year yield decreased seven basis points to 0.67%.

Commodities

--The Bloomberg Commodity index advanced 0.3%.

--West Texas Intermediate crude climbed to $56.10 a barrel.

--Gold gained 1% to $1,484.20 an ounce.