US government bonds rose and global stock markets fell sharply as concerns about inflation were replaced by concerns about the global economy recovering from the coronavirus.
The yield on the 10-year U.S. Treasury note, which is inversely proportional to the price, fell 0.04 percentage points to 1.276%. This move caused the global benchmark bond yield, which affects global corporate and household borrowing costs, to fall to its lowest level since early February, and is expected to hit its biggest weekly decline since June 2020.
Asian stock markets fell first, then negative sentiment spread to Europe, and then to Wall Street. Analysts believed that this move was due to the sudden realization that the rapid growth of the US economy was about to peak, and at the same time signs of a slowdown in the Chinese economy.
The S&P 500 on Wall Street fell 1.5% in early trading, while the technology-focused Nasdaq Composite Index also fell 1.5%. After Hong Kong’s Hang Seng Index closed down 2.9%, the Stoxx Europe 600 Index fell 2.3%.
Shaniel Ramjee, senior investment manager at Pictet Asset Management, said: “We have seen changes in asset allocation, with people selling risky assets across the board and buying safer government bonds.”
This is in stark contrast to investors’ concerns about the overheating of the US economy in the first half of the year.they Sell off treasury bonds Their fixed interest payments have been eroded by inflation and they have bought shares in companies in economically sensitive industries such as banks and energy producers.
“The market tends to focus on only a few things at a time,” Ramji said. “The focus has shifted to the United States. The growth rate is slower than ever… Now people are paying more attention to China.”
On Wednesday, the Chinese government said it would use “Just in time” layoffs The bank’s reserve requirement ratio is required to keep funds flowing in the economy. Daiwa economist Chris Scicluna said that the move sent a signal that China’s second-quarter GDP data released next week “may be lower than market expectations,” that is, an increase of 8% over the same period last year.
Chinese ports and factory districts have been struggling to cope with the outbreak of the coronavirus delta variant, and Japan has announced Tokyo will enter a state of emergency throughout the Olympic Games to control the infection.
in Minutes of the most recent meeting Federal Reserve officials announced on Wednesday that “the uncertainty surrounding the economic outlook has increased.” Economists predict that the annualized growth rate of US GDP in the second quarter of this year will exceed 9% and will slow down thereafter.
The U.S. dollar index, which measures the U.S. dollar against major currencies, fell 0.4% on Thursday. The oil benchmark Brent crude fell 0.3% to US$73.20 per barrel.
European bonds also rose. The yield on German 10-year bonds fell 0.03 percentage points to minus 0.323%, the lowest level since March. Spain’s Ibex stock index fell 2.6%, and Italy’s FTSE MIB index fell 2.9%.
Maarten Geerdink, head of European equities at NN Investment Partners, said that after the coronavirus shutdown last year, the market “expects us to see the highest growth figures.” He added that the “price trend” is being “self-sufficient” because traders will dump stocks to prevent further blows.