Trump triggers fall off
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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.
|
1 Week Return 24.05.19 to 31.05.19 |
Year to Date Return 31.12.18 to 31.05.19 |
||
|
Local Currency |
Euro |
Local Currency |
Euro |
World |
-2.3% |
-1.8% |
8.6% |
11.4% |
US |
-2.6% |
-2.3% |
10.1% |
13.0% |
Europe |
-1.8% |
-1.8% |
9.5% |
9.5% |
Ireland |
-0.3% |
-0.3% |
13.2% |
13.2% |
UK |
-1.6% |
-1.9% |
6.0% |
7.7% |
Japan |
-1.9% |
-0.6% |
1.8% |
5.9% |
Hong Kong |
-2.3% |
-1.8% |
7.4% |
10.1% |
Corporate Bonds |
0.2% |
0.2% |
3.5% |
3.5% |
Sovereign Bonds |
0.7% |
0.7% |
5.5% |
5.5% |
Equities
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.
Commodities
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
Thursday 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.