Tensions between Trump and Xi over Taiwan are rising, which is bad news for stocks, bonds, and housing.

• Xi pressed Trump on whether the US would defend Taiwan if China attacked; Trump refused to answer.
• Xi warned of "clashes and conflicts" if Taiwan independence is mishandled, signaling China wants to take Taiwan.
• The real prize is semiconductor chips, which both sides need to lead in AI.
• Government bond yields jumped above 4.5%, which makes borrowing expensive and can freeze markets.
• Higher bond yields push mortgage rates up, and luxury home sellers are already struggling to sell.
• When rich investors get stuck holding homes, they pull money out of stocks, crypto, and real estate, slowing the whole economy.

Outlook: If the war rhetoric keeps escalating, expect more stress in bond markets and a slower housing market.