All major equity markets were down this week, with the US market suffering its worst week of the year, writes Ian Slattery.
A surprise announcement from the US administration about forthcoming tariffs on Mexican goods triggered a sharp rally in global bond markets, with the ten year Treasury yield gapping down to 2.12% on Friday. This was the biggest daily move since the Fed’s March meeting, while the ten year Bund yield fell to a new low of -0.21%.
Investors are reassessing the global growth and policy outlook amid escalating trade tensions, as the US market suffered its worst week this year, falling over 2.5%. The trigger for last week’s selloff was President Trump’s announcement that tariffs of up to 25% on all Mexican goods would be imposed if Mexico does not take decisive steps to fight illegal migration to the US.
However, Eurozone lending growth to households picked up to 3.4% YoY in April from 3.3% YoY in March, and US households remain in an upbeat mood with the Conference Board Consumer Confidence Index rising in May.
The MSCI World was down more than 2% in local terms with the euro return also down 1.8%. All major equity markets were down this week, with the US market suffering its worst week of the year.
Fixed Income & FX
The US 10 year yield ticked lower again during the week, moving to 2.12% from 2.32%.The German equivalent almost moved to a record low of -0.21%. The Euro US Dollar exchange rate remained unchanged on the previous week at 1.12, whilst Euro/GBP was at 0.88.
Oil finished the week lower at just below $53 per barrel. Gold finished the week up at $1,305 per troy ounce. Copper finished the week down at $5,806 per tonne.
THE WEEK AHEAD
Tuesday 6th June
- Eurozone unemployment and inflation data for May is released.
- The ECB meets for their latest interest rate decision.
Friday 7th June
- US Jobs report for May goes to print.