Financial markets and raw materials experienced a drop this Tuesday, reflecting growing investor concern about the possibility that “exceptionalism” of the American economy is beginning to fade due to weakness in manufacturing activity.
Volatility indicators increase indicating nervousness among operatorswhile traditional safe haven assets such as Treasuries and the dollar remained solid. Oil, copper and gold decline as the dollar strengthens.
The global dollar hits its lowest level in more than two months against the euro and the pound, while US government bond yields have declined over the past six weeksas investors believe the economic slowdown could lead to interest rate cuts this year
Chris Scicluna of Daiwa Capital commented that, although the market behavior in the first quarter was understandable, broader indicators have shown that the situation might not be as strong as expected. The MSCI world equity index fell 0.3% and the pan-European STOXX 600 fell 0.9% affected by the energy, mining and banking sectors
US stock futures were down around 0.5% and Wall Street’s “fear index” VIX hit its highest level in a week, while the Euro STOXX volatility index rose to its highest level. high in a month.
Markets: what the investor analyzes
This week is crucial with the publication of important data, including the Vacancy and Labor Turnover Survey (JOLTS) on Tuesday and May Nonfarm Payrolls on Friday, which will be closely watched to assess the strength of the U.S. labor market.
US Treasury yields fell to their lowest level in two weeks after the second consecutive month of decline in manufacturing activity in May. The return on 10-year notes decreased 2 basis points, standing at 4.381%, while that on two-year notes, which usually reflects expectations of rate increases, fell 1 basis point, to 4.8058%.
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The dollar loses 0.8% against the yen, considered a safe haven asset, trading at 154.88 units, its lowest level in two weeks and more than a 3% below the yearly high of 160.03 reached in late April.
The euro fell 0.3% to $1.0865, while the pound sterling traded at $1.0881, with a cumulative advance of 0.65% in one month. The dollar index, which compares the greenback with a basket of six major currencies, rose 0.2% to 104.28 units.
Oil prices decline about 2%, hitting four-month lows on Monday, after the OPEC+ will agree to withdraw some production cuts starting in October. Gold is down 0.9% to $2,330 an ounce, and copper, which hit record highs last month, is down 1.6% to $9,979 a ton.
