The bond market has slashed some of its biggest weekly progress since August, with the Treasury falling. The yield rose 19 basis points over the decade as investors settled profitable transactions to cover stock losses. Australia and New Zealand bonds tracked the movement.
Traders’ bets about how much the Federal Reserve will cut US interest rates this year are fluctuating. At least three cuts are now reflected in the interest swap this evening this year, with the initial price in June being fully priced.
In Asia, Chinese stocks plummeted on Monday, but sovereign yields have come close to an all-time low as investors backed themselves up from a spiral trade dispute between the two biggest economies in the world. China’s retaliation against Trump’s drastic tariffs has forced investors to confront the reality that the trade dispute has entered a very significant phase.
Meanwhile, Trump assigned two members of the Cabinet to begin bilateral trade talks with Japan after a call with Prime Minister Isba on Monday. Japan was slapped at a 25% automobile mandate plus a full-scale mutual tariff of 24%, which is scheduled to begin on Wednesday.
Volatility
After trillion dollar sales faced a string of twists and turns on Monday, traders looking for our stock have returned. The intrinsic reversal of the S&P 500’s bottom-to-top was the biggest since 2020 when Covid beat global trades, but the CBOE volatility index was pushed away from the 60 mark hit early on Monday.
As the market wobbled, parts of the Titans on Wall Street issued warnings. Bill Ackman said the United States is “heading towards a self-inducing, economic nuclear winter.” Boaz Weinstein predicted, “Avalanche is just beginning.” Jamie Dimon said, “It could be miserable in the long run.”
“We should see a strong bounce at some point soon, but the process of re-licating the market into a realistic economic outlook takes time,” said Matt Murray of Miratabak. “When it becomes clearer that the worst decline is behind us, there is plenty of time to be aggressive.”
