The commission unveiled two tariff exclusion lists, comprising 65 items in total, including noninvasive ventilators, spectrographs, genetic sequencing machines as well as parts for automatic aircraft navigation systems and semiconductors. The lists were released on the commission’s website.

All items on the two lists will enjoy exclusion of additional tariffs for a year through Feb 27, 2021. It means the items will not be subject to additional tariffs imposed by China on US products as countermeasures to US Section 301 measures, the statement said.

For the 55 items on the first list, tariffs that have already been levied on enterprises can be refunded. The affected enterprises can apply for refunds within six months from Friday, it said.

For the 10 items on the second list, they enjoy tariff exclusions but are not eligible for refunds, according to the commission.

“In the next step, the Customs Tariff Commission of the State Council will continue to work on the exclusion of additional tariffs on US products, and the lists of subsequent batches will be released in due course,” the statement said.

Some of the listed US products, such as noninvasive ventilators, are much-needed medical instruments to treat patients infected with the novel coronavirus.

Under current conditions, to include certain goods used in epidemic control and prevention on the exemption list will ease temporary supply shortages, said Xu Qiyuan, head of the research department at the China Finance 40 Forum and a researcher at the Chinese Academy of Social Sciences.

Due to the epidemic, imports of medical apparatus and instruments may increase. In the short term, China’s imports from the US are likely to rise, Xu said.

He told China Daily that the tariff exemptions could also send a signal of goodwill, and help improve trade relations between the two countries.

Other than medical supplies, some imports on the first list include primary and intermediate products, as well as spare parts, which can reduce production costs for Chinese enterprises and cement supply chains between Chinese and US companies. It will also help stabilize global supply chains, Xu added.

Wei Jianguo, former vice-minister of commerce, said the impact of the virus outbreak on production is temporary, and output in some regions, such as Zhejiang province, is gradually recovering.

Although foreign trade may be affected in the short run, the country’s countermeasures will support an economic rebound later and ease difficulties facing companies, especially small and medium-sized firms, Wei said.

On Tuesday, the commission issued a statement that China will accept applications from local companies, starting March 2, for the exemption of additional tariffs on 696 items of US imports.

Tech companies were particularly hard hit, sending the Nasdaq 100 down almost 2%. The S&P 500 Index posted its first weekly decline since January. The yield on 30-year Treasuries fell to a record low amid data showing U.S. business activity shrank for the first time since 2013 as the virus hit supply chains.

Investors were put on alert this week by a spike in infections outside China and a slew of fresh warnings by companies over the potential impact the deadly respiratory virus may have on business. The growing concerns reignited appetite for assets seen as havens from the turmoil and reversed stock gains that had sent the S&P 500 Index to a record high Wednesday.

“Investors have suddenly got cold feet and are running for the exits,” said Chris Rupkey, chief financial economist for MUFG Union Bank. “Bond yields and stock prices are back in sync today as the plunging markets mean the economic outlook is not looking as good this year as many thought.”

The Stoxx Europe 600 Index slumped, with automakers among the worst performers, after equities in Korea and Hong Kong dropped more than 1%. Crude oil fell after hitting the highest in almost four weeks.

Elsewhere, the yen strengthened, recouping some if its biggest two-day decline since 2017. The dollar slumped after a four-day winning streak. The euro strengthened after data showed economic activity in the common-currency area sped up unexpectedly.

These are the main moves in markets:

Stocks

– The S&P 500 Index dropped 1.1% at the close of trading in New York, leaving it down 1.3% this week.

– The Nasdaq 100 fell 1.9% Friday and 1.8% for the week.

– The Stoxx Europe 600 Index fell 0.5%.

– The MSCI Asia Pacific Index fell 0.5%.

Currencies

– The Bloomberg Dollar Spot Index fell 0.3%.

– The euro rose 0.6% to $1.0848.

– The British pound advanced 0.6% to $1.296.

– The Japanese yen strengthened 0.5% to 111.59 per dollar.

Bonds

– The yield on 10-year Treasuries declined five basis points to 1.47%.

– The yield on 30-year Treasuries fell five basis points to 1.91%

– Germany’s 10-year yield rose one basis point to -0.43%.

– Britain’s 10-year yield was little changed at 0.57%.

Commodities

– West Texas Intermediate crude sank 0.8% to $53.34 a barrel.

– Gold strengthened 1.5% to $1,644.38 an ounce.

But what exactly the new low foretells for the U.S. economy has divided the world into two remarkably contrary camps: those who see the new lows as another sign of relative U.S. strength, and those who see it as an unmistakable augury of tough economic times ahead, and possibly, recession.

Maybe most perplexing, massive market wagers have been made in support of both views: The optimists have pushed the stock market ever higher, while the pessimists have driven bond yields ever lower.

As a result, for those who look to the stock and bond markets for clues to the U.S. economy, the picture it presents alternates between exuberance and, increasingly, deep gloom.

“It’s getting so the dissonance between the bond market and stock market is deafening,” said Diane Swonk, chief economist at Grant Thornton.

On one side of the divide is the enthusiasm of the stock market. Though it dipped on Friday, the S&P 500 average is up 20 percent from its close a year ago. The troubles caused by the coronavirus, and the disruptions at countless Chinese factories, appears to have had little effect on these investors.

“We should be very calm about the U.S. side of the story which is actually looking pretty good,” National Economic Council Director Larry Kudlow said Friday on CNBC. “On the other hand, the Chinese side of the story is very difficult – it’s a human tragedy.”

In this view, the unusually low bond yields can be taken as a sign of U.S. strength. They dropped not because of any weakness in the U.S. economy, but because investors in the overseas economies most affected by the coronavirus are looking for safe investments – and for that they turn to U.S. Treasury bonds.

“I just think, in general, I would be very careful to put too much emphasis on what bond rates are doing,” Kudlow said. “I think you have a lot of mood swings here and I don’t think it affects the fundamentals.. . . I think the fundamentals of this economy are very solid, all right? Very solid.

In a speech earlier this month, Federal Reserve vice chair Randal Quarles said: “There is much to be encouraged by in the nation’s current economic performance even as some notable risks require careful monitoring.”

Many analysts agree. A panel of economists known as the Blue Chip Economic Indicators forecast panel, for example, predicted two weeks ago that the economy would continue to grow at roughly two percent.

“This is hardly exuberant,” according to the panel’s report, which also named the coronavirus epidemic as a risk. But “there is little evidence in these numbers of any expectation of disruptive shocks.”

But to other economists, the historic levels in bond yields reflect just one more potential fault line in a U.S. economy that has had a good run since the last recession, but one that won’t last forever. In this view, the economic effects of the coronavirus could be the shock that exposes any economic weaknesses.

“I know there are economists out there saying there is no chance of a recession,” Swonk said. “But I know that hubris is your enemy late in the business cycle.”

Indeed, economists, while noting how hard it can be to predict a downturn, pointed to several signs of stress in the economy that may be leading indicators of a recession.

Stock prices are relatively high, and have surged in recent months. Measured in terms of the ratio of price to earnings of stock in the S&P 500, they have risen substantially in recent years.

Corporate debt, too, has jumped. Since 2012, the amount of long-term debt at industrial companies on the S&P index has more than doubled, to $4 trillion, according to Howard Silverblatt of S&P Global.

Finally, Mark Zandi, chief economist at Moody’s Analytics, noted the occurrence of a longstanding indicator of imminent recession: the “inverted yield curve.” These occur when the interest rates on short-term bonds are higher than the interest rates paid by long-term bonds.

“It’s historically been a fool-proof leading indicator of recession,” Zandi said. “What it means is that people are so worried about the near-term future that they are piling into long-term investments – and it’s been inverted over the last week or so.”

Complicating all of these forecasts, the good and the bad, are the uncertain effects of the coronavirus on China and other major trading partners.

U.S. policymakers have at times dismissed the epidemic as a problem in China, not here. But more recently, some have acknowledged it could damage U.S. growth outlooks. Federal Reserve Board Chair Jerome Powell said this week there will “very likely be some effects on the United States” from the epidemic, which has closed thousands of Chinese factories supplying American companies.

Earlier this week, for example, Apple warned that it expects to fall short of revenue goals in the current quarter because of the coronavirus outbreak.

In a statement to investors, Apple said that while factories in China were reopening, restarting iPhone production in the country was moving along more slowly than expected.

“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said. “These iPhone supply shortages will temporarily affect revenues worldwide.”

Chinese demand for Apple products has also slumped, the company said.

Swonk and others have said the threat of coronavirus has been too quickly dismissed by some observers, in part because the economies proved relatively resilient during the SARS outbreak in 2003.

“Back in 2003, China was more of an island. Now it’s integrated into every economy in the world. It’s pivotal in the supply,” Swonk said. “The nature of the coronavirus is not something you can put in a traditional [economic] model. There are nonlinear implications.”

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Peter Whoriskey is a staff writer for The Washington Post whose investigative work focuses on American business and the economy. Previously, he worked at the Miami Herald, where he contributed to the paper’s coverage of Hurricane Andrew, which was awarded a Pulitzer Prize for public service.

The Fed should seek above-target price gains to make up for past inflation shortfalls and should cap Treasury debt yields if it’s forced to lower short-term rates as far as they can go in a downturn, she said in a speech in New York.

“Today’s low-inflation, low interest-rate environment requires not only new recession-fighting tools but also a new strategy to address the persistent undershooting of the inflation target — and the risk to inflation expectations — well before a downturn,” she said.

To that end, monetary “policy may have to remain accommodative for a long time” to make up for past inflation shortfalls, she added.The Fed is engaged in an in-depth review of its policies and practices that is aimed at finding ways to cope with a new normal of subdued inflation and low interest rates. The review is expected to be completed by the middle of this year.In publicly staking where she thinks her fellow policy makers should go, Brainard acknowledged that the changes she was proposing may not be sufficient to fully offset future economic contractions.

“In addition to a forceful response from monetary policy, robust countercyclical fiscal policy is vital,” she said in the speech to be delivered to a University of Chicago-sponsored monetary forum.

Brainard, who was appointed to the Fed in 2014, said the Fed should pre-commit before a recession that it will keep short-term interest rates at their lowest level until full employment and 2% inflation is achieved.”This forward guidance could be reinforced by interest rate caps on short-term Treasury securities over the same horizon,” she said.

The Fed though also needs to shift strategy well before a downturn to combat the risk that an extended period of below-target price gains has led to a decline in inflation expectations, Brainard said.

She called for the central bank’s policy-making Federal Open Market Committee to adopt a “flexible inflation averaging approach” that would aim to ensure that price gains average 2% over time.

“Following several years when inflation has remained in the range of 1.5% to 2%, the committee could target inflation outcomes in a range of 2% to 2.5% for a period to achieve inflation outcomes of 2%, on average, overall,” she said.

Under such an approach, the FOMC would make it clear that it would accommodate rather than offset modest upward pressures to inflation – a strategy that Brainard dubbed as “opportunistic reflation.”Since the Fed adopted its 2% price target in 2012, the personal consumption expenditures price index has on average risen 1.4%.

Fed officials left interest rates unchanged in a range of 1.5% to 1.75% at their Jan. 28-29 gathering and said the setting was “appropriate” to sustain the U.S. economic expansion and achieve the central bank’s goals of maximum employment and stable prices.

The current setting is less than half the 500 basis points in rate cuts that the Fed has made to fight past recessions.

Bullion headed for the biggest weekly gain in more than six months as prices hit a seven-year high. With bond yields in retreat and real U.S. interest rates sinking further into negative territory, gold-backed exchange-traded funds have posted a record run of inflows.

“Gold is in the midst of its perfect storm,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Spot gold climbed as much as 1.1% on Friday to $1,636.57 an ounce, the highest since February 2013. The metal extended this year’s gains to almost 8%.

Prices for the traditional haven hit records in other currencies including euros and Australian and Canadian dollars. Holdings in bullion-backed ETFs rose for 22 consecutive sessions to Thursday, the longest ever run, according to data compiled by Bloomberg.

This run of inflows “certainly gives an indication about concerns around the global economy,” Andrew Jamieson, global head of ETF product at Citigroup in London, said in an interview with Bloomberg TV.

U.S. government bond markets saw a rush of buying Thursday that piled up bets on rate cuts, supporting gold. The Commonwealth Bank of Australia expects the Federal Reserve to ease twice in the second half as the virus threatens the global economy.

Fresh data out of Japan and South Korea on Friday showed how the coronavirus outbreak is taking a toll on economic activity, adding further support to havens.

While there are lots of factors supporting gold, Saxo Bank’s Hansen noted the metal’s 14-day relative strength index is back in overbought territory.

Still, lower U.S. yields and weaker equities could push prices further toward $1,750 an ounce even if the coronavirus is contained during the first quarter, according to Goldman Sachs.

If the outbreak stretches beyond that, “we see substantially more upside from here — toward $1,850 an ounce, depending on the magnitude of the global monetary policy response,” the bank said in a note Friday.

Other precious metals also gained Friday. Palladium has jumped about 12% this week after hitting a record $2,849.61 an ounce on Wednesday.

Stronger demand and constrained supply will widen the deficit in the palladium market to 1.3 million ounces this year, keeping prices high, according to Australia & New Zealand Banking Group.

The greenback has gained versus some 30 major world currencies in the past month, coinciding with mounting concern over the outbreak’s economic impact. The yen and the Swiss franc, two traditional haven currencies, have proven no match.

The dollar’s appreciation is confounding the year-end consensus that overseas economies were set to strengthen and lure cash from the U.S. The deadly illness has upended that narrative, and yield-hungry investors are also shunning negative rates in Asia and Europe. And with no end in sight for the outbreak, momentum appears to be in the greenback’s favor.

“U.S. growth is more insulated from the virus-related demand hit to” Asia and Europe, Columbia Threadneedle’s Ed Al-Hussainy said in an email. Rate differentials also make “the dollar an exceptionally attractive safe-haven play.”

With coronavirus worries rising, the senior interest rates and currency analyst said the asset manager reduced exposure to emerging-market currencies and closed long-euro and sterling positions versus the dollar.

The dollar’s strength is a boon for international investors repatriating proceeds from American holdings, but it’s a potential drag for U.S. companies with earnings abroad.

The greenback touched a 10-month high of 112.23 yen Thursday amid worries that the ripple effects from the deadly illness could push Japan into recession. U.S. growth remains solid. Data Thursday showed a regional Federal Reserve manufacturing index surged this month to the highest level in three years. That contrast could mean further weakness for the yen — usually a go-to currency in times of uncertainty.

Makoto Noji, chief strategist for SMBC Nikko Securities in Tokyo, sees the yen potentially dropping toward 115 per dollar, a level last seen in 2017, should U.S. and Japanese growth continue to diverge.

For Momtchil Pojarliev, head of currencies at BNP Paribas Asset Management, the yen has cheapened enough. He bought some Thursday on the view that its haven characteristics will reassert themselves should the virus’s impact start showing up in economic data.

He’s still bullish the dollar versus other major currencies, though, because it’s “the clear safe-haven” and the virus “will have big implications for growth.”

There are other oases: Gold reached a seven-year high Friday, while 10-year Treasury yields fell as low as 1.47%, the lowest since September. The Swiss franc has weakened 1.6% this year, while the yen is down 3%.

“The market is starting to better discern between the currencies/assets it wants to hold in this virus-nervous world,” Alan Ruskin, chief international strategist at Deutsche Bank AG, said in an email. “In FX-land, the U.S. dollar is top.”

The IHS Markit purchasing managers’ index measuring composite output at factories and service providers fell by 3.7 points to 49.6, the lowest level since October 2013, when the U.S. government shut down, according to preliminary figures released Friday. Readings below 50 indicate contraction.

The 30-year Treasury yield touched a record low and U.S. stocks extended declines in the minutes following the release. The S&P 500 index was on track to record its first weekly drop this month.

It’s the first major piece of U.S. economic data to show a sizable hit from the coronavirus. Economists see the virus as generally cutting more into Asian countries’ growth. Similar indexes in Japan and Australia also weakened, likely cementing the disease’s economic impact as a key topic at this weekend’s meeting of Group of 20 finance chiefs.

The deterioration “was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions,” IHS Markit economist Chris Williamson said in a statement.

The epidemic has so far killed more than 2,200 people, mostly in China, and infected more than 75,000. The spread is accelerating outside of China, whose adjustments to the number of cases have raised questions about the reliability of the data.

The stumble in the IHS Markit survey was led by service providers, whose new orders registered the first contraction in data going back to 2009, while the manufacturing PMI fell to a six-month low of 50.8. Companies in both sectors noted reluctance among clients to place orders amid the global virus scare.

White House economic adviser Larry Kudlow said Friday that the virus is only hitting the U.S. economy in a “small way.”

“So far, it does not look like — whether it be supply chain or other problems — that the U.S. economy is getting hurt in any significant way. In a small way yes, in a significant way no,” Kudlow said in an interview on CNBC He said it does not seem to be a “major blow.”

The Markit composite index showed new exports contracted for a second month and hiring slowed.

The main focus of the economic pain is in Asia, where numerous reports indicate the impact, at least in the short term, could be severe. Manufacturing in Japan shrank the most in seven years in February, according to a report Friday, while early export orders for South Korea showed a slump in Chinese demand.

In China itself, car sales sank 92% in the first half of February, and the Commerce Ministry said trade and inbound investment would take an increasing hit.

Europe showed a bit more resilience to fallout from the virus. The PMI for both euro-area manufacturing and services edged higher this month, defying expectations for a decline. However, business sentiment dipped slightly, and there was a stronger decline in export orders. If the virus impact continues to build, that weakness could intensify, hurting European business.

In the U.S., companies also expressed concern about a wider economic slowdown and the 2020 presidential election, which could result in a Democratic victor who takes policy in a different direction from Donald Trump. At the same time, firms were optimistic that the slump would be temporary, according to the report.

Contract closings eased 1.3% from the prior month to a 5.46 million annual rate, according to National Association of Realtors data released Friday that slightly exceeded the median estimate in Bloomberg’s survey. The median sales price climbed 6.8% from a year earlier to $266,300 as inventories remained slim.

The better-than-expected sales pace underscores how a robust jobs market, rising wages and low mortgage rates are bolstering housing demand. The report and other recent data, such as a surge in single-family housing permits, suggest that the outlook for the sector remains bright.

While the data showed a slight slowdown in sales, the rate remains near December’s level, which was the best in almost two years. Those levels underscore how the housing market has stabilized after emerging last year from a long slump.

While new-home construction has rebounded, scarce inventory continues to limit sales. At the current pace, it would take 3.1 months to sell all the homes on the market, compared with 3 months in December, the lowest in more than two decades of data. Realtors see anything below five months of supply as a sign of a tight market.

“If you look at December and January together, the housing market is doing quite well in terms of sales, but still being constrained by an inventory shortage pushing up prices too fast,” Lawrence Yun, NAR’s chief economist, said at a briefing in Washington.

Regional readings were mixed. Sales in the West fell 9.4% from the prior month amid affordability challenges. The Midwest and South saw modest gains while the Northeast was unchanged.

First-time buyers made up 32% of sales, up slightly from 31% the previous month.

Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are counted when contracts are signed and will be released Wednesday.

Finance ministers and central bankers from the Group of 20 nations will meet on Saturday and Sunday in the Saudi capital of Riyadh for the first time since the virus forced much of China to be quarantined and then began to spread.

The consensus of economists remains for a short-term hit to demand in China and then globally, followed by a rebound. The International Monetary Fund reiterated this week that the worldwide expansion is set to “moderately strengthen” this year after being hurt in 2019 by the U.S.-China trade war.

That could prove too optimistic a view given Chinese factories are still operating around half their capacity and many workers remain housebound. The partial shutdown of the world’s second biggest economy is having an effect elsewhere by weakening trade, fraying manufacturing supply chains, reducing tourism and fanning investor uncertainty.

“We’re watching the impact with grave concern and keeping a close eye on downside risks,” Bank of Japan Governor Haruhiko Kuroda told lawmakers in Tokyo before heading to Saudi Arabia.

Other topics set to be discussed by the G-20 include the use of digital currencies, the imposition of taxes on technology companies and money laundering. A statement will be released by the hosts on Sunday.

But the virus will dominate the debate. Already on course for its worst expansion in three decades, some analysts now reckon the Chinese economy will contract this quarter from the previous three months. France, Italy and Japan already did so at the end of last year.

Fresh data on Friday underscored the reason for concern at the G-20 meeting as U.S. business activity shrank for the first time since 2013, while manufacturing gauges in Australia and Japan weakened and early export orders for South Korea showed a slump in Chinese demand. China reported car sales sank 92% in the first half of February. The euro area went against the trend though, with activity accelerating at the fastest pace in six months in February.

Economists at Standard Chartered said in a report on Friday that the virus could end up affecting 42% of China’s economy as they also cut their forecast for global growth this year to 3% from 3.2%. Even worse would be an international pandemic, defined as a disease spreading across multiple continents. Oxford Economics Ltd. calculates such an event could slash world output by more than $1 trillion.

“If growth continues to slide, a key question for the G-20 will be whether its members can coordinate a response,” said Tom Orlik, chief economist at Bloomberg Economics in Washington. “Against a backdrop of resurgent nationalism, fractious trade disputes, and limited policy space, common purpose might be difficult to achieve.”

Some G-20 policymakers are already responding. China has led the way by cutting market interest rates, and could take the bolder step of reducing reserve requirements.

Central banks in Indonesia, Mexico, Turkey and South Africa have also cut rates this year. Governments in more than half of the G-20 economies are easing budgets with South Korean President Moon Jae-in this week calling for an “emergency prescription.”

Others are adopting a wait-and-see stance. While Federal Reserve and European Central Bank officials are on the alert to the risks posed by the virus, they have so far not signaled any intention to loosen monetary policy.

A dilemma for policy makers is that although IMF Managing Director Kristalina Georgieva has suggested there may be a need for “synchronized, or even better, coordinated measures,” central banks and governments lack ammunition given the low level of interest rates and high level of budget deficits.

One reason for confidence is that stock investors still seem to be betting on a V-shaped recovery. The Standard & Poor’s 500 Index is up 4% this year and 22% from a year ago, and the broader MSCI World Index has also climbed over the same timeframes.

Such gains, however, are a concern to economists at Citigroup Inc. In the advanced economies alone, they say easy financial conditions point to growth of 2.6% this year, twice the pace they predict.

“Financial markets could be overconfident in expecting an economic recovery,” said Pernille Henneberg, an economist at Citigroup. “The global economy and financial markets have not seen the full impact of the coronavirus outbreak yet.”