Government bond prices hit historic new highs on Friday as futures stocks in Europe and the United States fell due to fears of the cascading economic disruption caused by the spread of the coronavirus.
With safe haven assets in high demand and traders increasing their bets on the US Federal Reserve again cutting interest rates, the yield on 10-year public debt slipped 0.21 percentage points to just 0.6980 % – a new record. Yields stood at 1.9% at the start of this year.
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10-year Treasury yields have fallen by more than 0.3 percentage points in each of the past two weeks, their largest move since the peak of the 2008-2009 financial crisis. Yields fall when prices rise.
British government bonds also hit new records, with 10-year yields falling to 0.246%. Yields on the German Bund of the same maturity, already in negative territory, fell to a record 0.738%.
Meanwhile, European stocks fell, London’s FTSE 100 losing 3% and the Frankfurt Dax down nearly 4% in some of the biggest selling stocks since the coronavirus epidemic began to shake world markets last month.
The Stoxx 600 index, which tracks major companies in the region, was on track for its third consecutive week of declines and is now trading at its lowest level this year.
“The markets are struggling to balance the competing forces of broader virus containment and monetary and fiscal stimulus,” said Mark Haefele, chief investment officer of UBS Global Wealth Management.
Futures also showed that US stocks were headed for another significant decline on Wall Street, with the S&P 500 expected to drop about 3% after Thursday’s session closed, down 3.4%, concerns about the spread of the coronavirus that has swept the markets.
Some analysts have advised keeping a cool head. “Don’t panic,” said Alain Bokobza, strategist at Société Générale. “We do not recommend that you go from a balanced approach [portfolio] at this stage. Decision makers have clearly entered the race, which should prevent – for now – an extensive bear market on risky assets. “
Crude oil Brent, the international benchmark, fell by almost 5% to fall further below $ 50 (44.69 €) per barrel, trading around its lowest level in three years while Opec and Russia were sitting down for crosstalk in Vienna on how to respond to the triggering coronavirus.
Gold was headed for its biggest weekly gain since 2016, with investors looking for safe places to store their money. The metal, which has risen nearly 6% since Monday, was also boosted by the collapse of government bond yields to their historic lows.
Reference
The Japanese Topix index fell 2.9% previously, the yen, considered a refuge in times of uncertainty, strengthened by 0.9% to reach a six-month high of ¥ 105.20 per dollar. The Topix benchmark is the main underperforming stock market index in the world in 2020 and is on track for its fourth week of losses.
The Chinese CSI 300 fell 1.5%, bringing it back to the two-year high recorded on Thursday. However, the index of stocks listed in Shanghai and Shenzhen posted its best week in a year as investors prepared for more Beijing bailouts.
The Asian Development Bank on Friday warned that the disruption caused by the coronavirus epidemic could cut China’s economic growth by 1.7% in the worst case and reduce world gross domestic product by 0.4% , with losses totaling up to $ 347 billion. worldwide.
Earlier this week, the Fed cut interest rates by half a percentage point after an emergency meeting. Futures markets registered another reduction of half a point at the meeting of Fed decision makers from March 17 to 18. They imply a 68% probability that there will be a further quarter point reduction at the April central bank meeting.
Investors are also concerned about how the coronavirus outbreaks in Japan and South Korea will affect two of the largest economies in Asia. On Friday, S&P Global Ratings plans to dig $ 211 billion ($ 188 million) into regional economies this year, bringing Asia-Pacific annual growth rate to the lowest since the global financial crisis.
“Household spending in Japan and Korea is expected to weaken further, and slower growth in the United States and Europe will worsen external headwinds,” said Shaun Roache, S&P chief economist for Asia-Pacific . – Copyright The Financial Times Limited 2020
Government bond prices hit historic new highs on Friday as futures stocks in Europe and the United States fell due to fears of the cascading economic disruption caused by the spread of the coronavirus.
With safe haven assets in high demand and traders increasing their bets on the US Federal Reserve again cutting interest rates, the yield on 10-year public debt slipped 0.21 percentage points to just 0.6980 % – a new record. Yields stood at 1.9% at the start of this year.
Sale
10-year Treasury yields have fallen by more than 0.3 percentage points in each of the past two weeks, their largest move since the peak of the 2008-2009 financial crisis. Yields fall when prices rise.
British government bonds also hit new records, with 10-year yields falling to 0.246%. Yields on the German Bund of the same maturity, already in negative territory, fell to a record 0.738%.
Meanwhile, European stocks fell, London’s FTSE 100 losing 3% and the Frankfurt Dax down nearly 4% in some of the biggest selling stocks since the coronavirus epidemic began to shake world markets last month.
The Stoxx 600 index, which tracks major companies in the region, was on track for its third consecutive week of declines and is now trading at its lowest level this year.
“The markets are struggling to balance the competing forces of broader virus containment and monetary and fiscal stimulus,” said Mark Haefele, chief investment officer of UBS Global Wealth Management.
Futures also showed that US stocks were headed for another significant decline on Wall Street, with the S&P 500 expected to drop about 3% after Thursday’s session closed, down 3.4%, concerns about the spread of the coronavirus that has swept the markets.
Some analysts have advised keeping a cool head. “Don’t panic,” said Alain Bokobza, strategist at Société Générale. “We do not recommend that you go from a balanced approach [portfolio] at this stage. Decision makers have clearly entered the race, which should prevent – for now – an extensive bear market on risky assets. “
Crude oil Brent, the international benchmark, fell by almost 5% to fall further below $ 50 (44.69 €) per barrel, trading around its lowest level in three years while Opec and Russia were sitting down for crosstalk in Vienna on how to respond to the triggering coronavirus.
Gold was headed for its biggest weekly gain since 2016, with investors looking for safe places to store their money. The metal, which has risen nearly 6% since Monday, was also boosted by the collapse of government bond yields to their historic lows.
Reference
The Japanese Topix index fell 2.9% previously, the yen, considered a refuge in times of uncertainty, strengthened by 0.9% to reach a six-month high of ¥ 105.20 per dollar. The Topix benchmark is the main underperforming stock market index in the world in 2020 and is on track for its fourth week of losses.
The Chinese CSI 300 fell 1.5%, bringing it back to the two-year high recorded on Thursday. However, the index of stocks listed in Shanghai and Shenzhen posted its best week in a year as investors prepared for more Beijing bailouts.
The Asian Development Bank on Friday warned that the disruption caused by the coronavirus epidemic could cut China’s economic growth by 1.7% in the worst case and reduce world gross domestic product by 0.4% , with losses totaling up to $ 347 billion. worldwide.
Earlier this week, the Fed cut interest rates by half a percentage point after an emergency meeting. Futures markets registered another reduction of half a point at the meeting of Fed decision makers from March 17 to 18. They imply a 68% probability that there will be a further quarter point reduction at the April central bank meeting.
Investors are also concerned about how the coronavirus outbreaks in Japan and South Korea will affect two of the largest economies in Asia. On Friday, S&P Global Ratings plans to dig $ 211 billion ($ 188 million) into regional economies this year, bringing Asia-Pacific annual growth rate to the lowest since the global financial crisis.
“Household spending in Japan and Korea is expected to weaken further, and slower growth in the United States and Europe will worsen external headwinds,” said Shaun Roache, S&P chief economist for Asia-Pacific . – Copyright The Financial Times Limited 2020