The financial markets and raw materials experienced the majority of falls 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 increased indicating nervousness among operatorswhile traditional safe haven assets such as Treasuries and the dollar remained solid. Oil, copper and gold fell 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. In this context, the Euro STOXX volatility index rose to its highest level in a month.
Meanwhile, on Wall Street, stocks were able to reverse the day’s losses and closed with slight gains and New York’s “fear index”, the VIX, ended with a slight increase of 0.4% after reaching its highest level in a week in the first hours of the round.
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 yield on 10-year notes fell 5 basis points to 4.332% and reached 4.314%, its lowest level since May 16. The two-year yield fell 5 basis points, to 4.773%, and reached 4.749%, also its lowest since May 16.
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The dollar index rose 0.1%, to 104.12, after falling overnight to 103.99, its lowest level since mid-April. The euro, the main component of the dollar index, fell 0.2% to $1.0879.
Lastly, lBrent oil futures fell 84 cents, or 1.1%, au$77.52 a barrelwidening losses from the four-month low hit the day before.
U.S. West Texas Intermediate (WTI) futures fell 97 cents, or 1.3%, to $73.25. In the previous day it plummeted 3.6%, close to its lowest level in four months.
