Goldman Sachs warned of another potential global equity drawdown in a note to clients yesterday. “The probability of a further sell-off recently went above 35%,” the note, seen by Fortune, says.

U.S. Treasury yields spiked at times during Asia trading hours, as investors ditched the traditional safe haven. That puts pressure on the Trump administration, which previously cited the shaky bond market for Wednesday’s decision to delay tariffs. 

The U.S. Dollar Index fell by 1.4%, with investors going to other currencies like the Japanese yen, the Swiss franc, and the Euro. Gold, another safe haven, also broke past $3,200 an ounce.

“There’s clearly an exodus from U.S. assets. A falling currency and bond market is never a good sign,” Kyle Rodda, senior financial markets analyst at Capital.com, told Reuters. “This goes beyond pricing in a growth slowdown and trade uncertainty.”

Here’s a snapshot of the chaos, from Fortune‘s CEO Daily:

• The S&P 500 dropped another 3.5% yesterday and is now down 10.4% YTD. 
• S&P 500 futures were in the red this morning, pre-opening bell.
• By contrast: China’s SSE Composite rose 0.45% today and is down only 0.75% YTD.
• Treasuries are behaving like risk assets. That’s not good, former Treasury Secretary Lawrence Summers says.
• The price of gold—famously a safe haven for investors—hit a new record high.
• The VIX fear index remains at its highest since Covid struck in 2020.
• The dollar is weakening. It has lost 8.34% of its value YTD versus the DXY, an index that tracks a basket of commonly traded currencies.

Friday’s drops follow a steep decline on U.S. stock markets Thursday, as tariff worries continued to weigh on investors despite Trump’s tariff pause earlier this week. The S&P 500 dropped by 3.5%, the worst drop in three years. 

Investors are grappling with an escalating trade war and confusing U.S. policy, as the world’s two largest economies hike their tariff rates to staggeringly high levels. 

The U.S. now imposes a 145% tariff on all imports from China, the only country to get Trump’s “reciprocal tariffs.” Late Friday, Beijing responded to the U.S. president’s latest tariff hike, raising its own duties on U.S. imports to 125%, starting April 12. That’s likely to almost completely eradicate bilateral goods trade between the world’s two largest economies.

Despite Trump’s decision to pause his “reciprocal tariffs”, U.S. import duties are still at historically high levels, thanks to the 145% tariff on Chinese imports, a flat 10% tariff on all other imports, and 25% tariffs on sectors like cars, steel and aluminum.

Some Asian markets tracked Thursday’s sharp decline in U.S. markets. Japan’s Nikkei 225 index led declines among major Asia-Pacific markets, falling by almost 3% on Friday. South Korea’s KOSPI also fell by 0.5%, while Australia’s S&P/ASX 200 dropped by 0.8%.

Japanese and South Korean manufacturers posted steep declines on Friday, with Sony falling by 7.4%, the largest from an Asian Global 500 company. 

Other Asian markets were more optimistic, despite the escalating trade war. 

Hong Kong’s Hang Seng Index rose by 1.1%, its fourth straight day of gains as the city recovers from Monday’s market crash, the worst since 1997. EV shares rose sharply following a report from German newspaper Handelsblatt that China and Europe are in negotiations to reduce EU tariffs on Chinese cars.

Taiwan’s TAIEX index rose by 2.8%, with manufacturers like Foxconn and Quanta Computer posting more than 9% gains in Friday trading.

Indian markets also rose, with the NIFTY 50 rising 1.8% as of 5:20am Eastern. It’s the country’s first day of trading since Trump announced his tariff pause. (India’s exchanges were closed on April 10.)

Time for a deal?

U.S. trading partners are scrambling to negotiate trade deals with the Trump administration and head off steep “reciprocal tariffs.” 

As of now, there are no signs that U.S. and Chinese officials will start negotiations to roll back tariff rates that now extend into the triple digits. Instead, Chinese president Xi Jinping is about to start a tour of Southeast Asia; he will also host European leaders in Beijing in July, the South China Morning Post reports.

Both the U.S. and China are at least suggesting that they won’t raise tariffs any further. Trump, in comments to reporters on Wednesday, said that he wasn’t likely to impose new tariffs on China.

And on Friday, Beijing said it wouldn’t retaliate to any further Trump threats, arguing that at this point, further tariff hikes are meaingless. “If the U.S. further raises tariffs on Chinese exports, China will disregard such measures,” the country’s finance ministry said in a statement.