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Home / Business / Bond market is signaling recession, price fluctuations and infinite trade war

Bond market is signaling recession, price fluctuations and infinite trade war



Traders Signal Offer in Ten-Year Listing Listing at the Chicago Board of Trade.

Scott Olson | | Getty Images

Investors embarked on the security of bonds Thursday and dumped stocks, as it turned out that the trade war could be longer and more painful for the world economy than expected.

The movements in the bond market were dramatic, with 10-year government bonds giving a decline of 8 basis points in their largest one-time movement since April 1

. At the same time, traders in matfonds futures at the Fed are trading two quarterly reductions by mid-next year and possibly a third in the second half of 2020.

Return on some issues, such as 10-year and 30-year bonds, fell through this year's downturn, Previously viewed as a floor but now served as a magnet for buyers which resulted in an even lower dividend. The 10-year return affected 2.29%, the lowest level since October 2017.

"The market obviously tells that it is quite concerned about some of the incoming data, including this morning's PMIs, the ongoing trade rhetoric and it is moving in risk benefits "Cabana said the market now believes that a full-blown commercial war is coming, with taxes on all China's products." [ThemarketisrightnowisthatwearemovingAgainsttheworstcasescenarioitmaytakealongtimeIfsothemarketbelievesin[weak] economic data, and the Fed will probably need to respond to it by trying to compensate and prevent a recession, he said.

The 10-year return fell during the first year for the second time this year. The so-called inverted yield curve has been a reliable sign of a recession if the movement is maintained. The US market also followed Europe's bond market. The German bottom fell to a low yield of negatively 0.12%, reflecting concern for the European parliamentary vote.

Wall Street is increasingly believing that the Trump administration is willing to charge an additional $ 300 billion in Chinese goods, as no new talks are scheduled. China said through the Trade Department Wednesday that the United States was going to act with sincerity and change its "erroneous actions." "

" This only adjusts to reflect the new normal-very low neutral rates, difficulties in achieving inflation and the risk of a recession, says Jon Hill, CFO at BMO.

Bond yields, which move the opposite price, also fell in sympathy with the sale of shares. Dow finished the day down 286 points, or 1.1% to 25,490. More than 400 points had declined during the trading day.

"Normally if you had a day like this a few weeks ago, there would be someone from the Trump administration who came out saying how progress was made … and it's crickets along those lines today and I think There is evidence of the magnitude of the excitement, and it looks like we're going to see things get worse before they can get better, Cabana said in the early afternoon.

Later around 15:50, President Donald T Rump said he Believe that things are likely to happen quickly with China, although it was unclear, it seemed to help lift stocks, while returns moved down.

Wall Street economists and strategists issued several forecasts on Thursday with expectations of another batch route. threatened to put 25% tariffs on the remaining $ 300 billion in Chinese imports so far not having rates.

The bond market also reflected growing fears of a softer economy, yielding an even bigger move lower Thursday after a mother Reports that Markit USA's production and services composite fell to a 3-year low of 50.9. Markit said that growth in business activity delayed in May when trade war was concerned. It was also said that increased uncertainty appeared to damage orders and confidence.

Mike Schumacher, director strategy at Wells Fargo, said moving in dividends may have been exaggerated on Thursday and could have been exaggerated by investors forced to reposition.

"It's the lowest it has been for a long time. You really have to go back to 2016 to get a sustained monster rally like this," Schumacher said. He noted that the 10-year return had reached 3.21 in November last year and has now moved 91 basis points in a six-month period. In 2016, 10 years moved to 1.36%, in early July, just after the Brexit vote.


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