The bond market ends the week with a ‘wild day’

Government bond prices soared on Friday as weak economic data from the United States and Europe stoked concerns about slowing global growth.

Germany’s 10-year government bond yield, which is moving in the opposite direction of its price, fell 0.19 percentage point to around 1.02 percent, its biggest daily drop in a month. In the United States, the 10-year Treasury yield, which supports borrowing costs around the world, sank 0.1 percentage point to around 2.77 percent, extending a 0.15 percentage point decline on Thursday.

“It’s been a wild day,” said Andrew Brenner, director of international fixed income at National Alliance Securities. “The fear of a recession is increasing.”

Both US and German government bonds are considered safe places for investors to put their money in periods of concern, causing prices to rise and yields to fall. Bonds also reflect investors’ expectations about the health of the economy.

Data released on Friday indicated a slowdown in business activity in the United States and Europe, adding to fears of a recession and causing a sharp pullback in expectations of further interest rate hikes by the Federal Reserve. .

Central banks around the world have been raising interest rates to curb demand and reduce stubbornly high inflation. But concerns have grown that tighter policies could go too far, prompting central banks to end their pursuit of higher interest rates and move instead to easing financial conditions.

Subadra Rajappa, head of US rates strategy at Société Générale, said the moves in government bond markets had been “quite spectacular” and also puzzling. “It’s been a bit unnerving,” he said.

Ms Rajappa attributed the moves to “widespread jitters” triggered by weakening economic data, a surprising set of announcements from the European Central Bank on Thursday and more technical reasons pointing to the challenges of trading even the safest of financial assets.

Gennadiy Goldberg, rates strategist at TD Securities, said that on Thursday a large block transaction, a large transaction, usually done by an institutional investor, helped start the move in US Treasury debt, and then the Weak data points added to the momentum. Markets have been “jumped”, he said, especially in response to bad news.

“I don’t think it was just one thing: It was death by a thousand cuts for the Treasury market,” he said.

  • Elsewhere, stocks fell, weighed down by weak earnings reports from big tech companies like Snap and Twitter. Still, the S&P 500 was on track to end the week up 2.3 percent, its best week since late June.

  • Oil prices rose, with Brent crude, the international benchmark, up 0.4 percent to $104.23 a barrel.

  • The US dollar sank 0.5 percent against a basket of currencies from its major trading partners, heading for its second weekly decline in eight weeks.

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