Anxiety Grips Markets on Political Turmoil – US Market Wrap

A renewed wave of anxiety gripped global markets as concerns about a political crisis in France worsened, driving stocks lower and sparking a flight to haven assets such as bonds, gold, and the US dollar.

Traders reduced their risk exposure, with French shares losing approximately $210 billion in value this week – equivalent to the size of Greece’s economy – after President Emmanuel Macron called a snap election. Since then, France’s bonds have been at the centre of the sell-off, with investors demanding a record premium to own 10-year debt over safer German peers this week.

In the United States, stocks struggled to gain traction as a measure of consumer sentiment unexpectedly fell to a seven-month low as high prices continued to weigh on personal finances. Despite the positive news in the most recent data, Federal Reserve Bank of Cleveland President Mester believes inflation risks remain tilted to the upside.

Treasury 10-year yields fell four basis points, to 4.21%. The dollar reached its peak since November. This week, the euro was one of the worst-performing major currencies against the dollar.