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EXISTING GRAPHICS MAY BE OVERWRITTEN BY CLIENT'S OWN GRAPHICS BUT NO FURTHER EDITS ARE PERMITTED, INCLUDING FOR LENGTH** Stocks slid sharply on Wall Street Wednesday... The Dow fell nearly 600 points-- just minutes after the open and the S&P and Nasdaq dropped over 1 percent....before regaining some ground but still staying in the red.
Treasury yields declined and gold hit a more than six-year high- as investors rushed into safe havens.
A U.S. bond market indicator on recession is at its most elevated levels since March 2007... The fear-factor behind Wednesday's drop?
Simmering trade tensions between the U.S. and China... which President Trump tried to play down on Wednesday.
(SOUNDBITE) U.S. PRESIDENT DONALD TRUMP SAYING: "The market reaction is anticipated.
I would have anticipated even more but ultimately it's going to go much higher than it ever would have gone, because China was like an anchor on us.
China was killing us with unfair trade deals." China set a weaker-than-expected yuan level overnight, after devaluing its currency on Monday -prompting Washington to label Beijing a currency manipulator for the first time since 1994.
(SOUNDBITE) U.S. PRESIDENT DONALD TRUMP SAYING: "China just admitted yesterday that they're a currency manipulator.
First time they've been called out." Beijing has - in fact - firmly rejected this designation.
But the yuan's rate against the dollar is significant --because a lower currency makes a country's exports cheaper on international markets.
China made the surprise move after President Donald Trump announced a 10% tariff on an additional $300 billion worth of Chinese goods -set to take effect from September 1st.
And even though investors fear the tariffs and the esclating tensions - Trump is not backing down.
(SOUNDBITE) U.S. PRESIDENT DONALD TRUMP SAYING: "Somebody had to do this with China because they were taking hundreds of billions dollars a year out of the U.S. and somebody had to take a stand.
No I think our country is doing really well." But even though in Trump's own words ' the country is doing really well' Trump still wants the Federal Reserve to grease the wheels..
Writing on Twitter Wednesday "They must Cut Rates bigger and faster" The central bank made a quarter-point rate cut last week..
And investors are betting there are more rate cuts to come..