Treasuries Rise & Equities Fall Due to Growth Concerns – Asia Market Wrap
On Monday, equities and Treasury yields fell as concerns about the health of the US economy impacted on investors’ appetites for risk.
Asian stocks dipped, while equities futures contracts for the S&P 500 slid 0.4%, as did those for the tech-heavy Nasdaq 100. Treasury rates fell across maturities as investors sought the safety of fixed-income securities.
The Dollar index fell just short of its lowest level since November as confidence in continued US economic outperformance waned. Gold rose slightly, but oil plummeted to its lowest level since September as dismal economic data from China exacerbated a bleak picture for demand.
Tariffs on major trading partners, a higher unemployment rate, and federal workforce job cuts all point to a slowing in growth in the world’s largest economy, which had been beating China and Europe for months. Bond dealers are suggesting a rising danger that the US economy may halt, despite Trump’s claim that the country is in “a period of transition.”
Traders have been rushing into short-dated Treasuries, driving the two-year yield considerably down since mid-February on hopes that the Fed may continue cutting interest rates as soon as May to protect the economy from worsening. The movement is a sudden turn for the Treasuries market, where the major driver of the prior several years had been the remarkable resilience of the US economy, even as growth deteriorated overseas.
