Government bond markets rallied on Thursday after weaker than expected eurozone business surveys intensified worries about the health of the global economy.
Germany’s 10-year Bund yield dropped 0.19 percentage points to 1.43 per cent, reflecting a sharp rise in the price of the benchmark debt instrument, after a survey of eurozone business activity registered a reading of 51.9 for June — lower than consensus estimates of 54.
An S&P Global purchasing managers’ index for Germany, spanning services and manufacturing, gave a reading of 51.3 — down from expectations of 53.1. Any figure above 50 signifies expansion.
“Excluding pandemic lockdown months, June’s slowdown [for the eurozone] was the most abrupt recorded by the survey since the height of the global financial crisis in November 2008,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Thursday’s gloomy European survey data came after US Federal Reserve chair Jay Powell said on Wednesday, during the first of two days of congressional testimony, that recession was “certainly a possibility” for the world’s largest economy — though he argued that it was sufficiently resilient to withstand tougher monetary policy.
The yield on the 10-year US Treasury note dropped 0.08 percentage points to 3.07 per cent on Thursday, while the policy-sensitive two-year US yield fell 0.12 percentage points.
In equity markets, Wall Street’s S&P 500 gauge added 0.4 per cent in early dealings. The technology-heavy Nasdaq Composite edged 0.2 per cent higher. Europe’s Stoxx 600 index lost 0.9 per cent, while the UK’s FTSE 100 fell 0.8 per cent.
“The market is already down over 20 per cent in the US; about the same in Europe,” said Marco Pirondini, head of US equities at Amundi. “A lot is already in the market, which is telling you there’ll be a slowdown.”
Oil prices slipped 0.3 per cent lower to just over $111 a barrel on Thursday, extending steeper losses from…
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