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We suspend our usual programming to cover the developing financial market and likely economic reaction to China’s decision to let the yuan tumble in retaliation to President Donald Trump’s decision last week to place a 10% tariff on an additional $300 billion in Chinese exports to the United States. Topics I can imagine posting on today include hedges/longs in this market, what the Fed can do, the next move by the U.S., the new odds of a recession, and wither the U.S. dollar.

China promised to retaliate when on Thursday President Donald Trump imposed a 10% tariff on an additional $300 billion in Chinese exports to the United States.

Well, it didn’t take long.

Today China struck back by allowing its tightly controlled currency to slide to an 11-year low against the U.S. dollar. The yuan fell below the 7 yuan to a dollar ratio that the People’s Bank had seemed determined to defend in recent weeks.

The Chinese government has also moved to suspend official purchases of U.S. farm products such as soybeans.

President Trump immediately branded the move “currency manipulation,” which it is, and seemed to call on the Federal Reserve to do “something” to weaken the dollar in response.

A weaker yuan will at least temporarily make Chinese goods cheap for customers buying in currencies such as the U.S. dollar. (Which has the effect of offsetting some of the higher tariffs imposed last week. Those tariffs are scheduled to go into effect on September 1.) A weaker yuan will also make goods sold in dollar to Chinese customers–such as Boeing (BA) aircraft and Caterpillar (CAT) equipment more expensive.

The financial markets have plunged today on the immediate short-term damage inflicted by the higher U.S. tariffs, the weaker yuan, and the increased likelihood that the current U.S.-China trade war will get worse before it gets better.

As of 1:30 p.m. New York time the Standard & Poor’s 500 was down 2.69% and the Dow Jones Industrial Average was lower by 2.68% (or 715 points.) The NASDAQ Composite had lost 3.26% and the small cap Russell 2000 had tumbled 2.91%. The Technology Select Sector SPDR ETF (XLK) lost 3.85% and the Financial Select Sector SPDR ETF (XLF) plunged 2.95%

Export sensitive stocks fell with Caterpillar (CAT), for example, down 2.53%. Deere (DE), which will get hit with a double whammy from the currency devaluation and the suspension of official Chinese purchases of U.S. farm procures, was lower by 4.28%.

Assets that hedge risk were up for their part. Gold climbed 1.24% to $1475.50 an ounce. Silver was ahead 0.678% to $16.38 an ounce.

The Dollar Spot Index (DXY) fell 0.62% and the CBOE S&P 500 Volatility Index (VIX) rose 27.7%.