Yields Sink as PMI Data Heightens Recession Angst: Markets Wrap


(Bloomberg) — Investors fled into the protection of bonds and sold stocks as a lurch toward higher rates of interest and weak manufacturing data heightened anxiety that aggressive central bank policy will tip economies into recession.

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Global stocks headed for his or her biggest weekly decline in greater than three months. In Europe, equities prolonged their longest losing streak since December, paced by a record 36% drop in Siemens Energy AG’s shares after a profit warning.

“Financial markets have had one among those switches within the narrative that occur occasionally, and are beginning to worry about higher rates of interest driving recessions,” said Paul Donovan, chief economist at UBS Global Wealth Management.

A rally in European bonds sent five-year German bund yields plummeting as much as 15 basis points to 2.49%, putting them on target for the most important drop since April. US Treasuries yields fell in sympathy, with the 10-year benchmark note shedding 7 basis points.

Germany’s economic activity lost rather more momentum than anticipated in June, driven by a slowdown in services and sustained weakness on the country’s factories, in accordance with business surveys by S&P Global. Separate data for France showed its economy probably slumped within the three months through June.

Concern concerning the economic outlook was reflected in a rotation into bonds and out of stocks in weekly flow data. Investors yanked $5 billion from global equity funds within the week through Wednesday and added $5.4 billion to bonds.

US stocks face more downside than upside over the subsequent two months as banks and property firms “still have bad recession vibes,” in accordance with the note from Bank of America strategists citing EPFR Global data.

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Treasury two-year yields hovered around 4.8% and near the very best since March after Federal Reserve Chair Jerome Powell said the US might have one or two more rate increases in 2023.

On Thursday the Bank of England unexpectedly raised its benchmark rate of interest by a half percentage point, warning it could have to hike again. Norway’s central bank accelerated its hikes and pledged more aggressive tightening, intensifying its response to stubborn inflation and a weak currency.

Key events this week:

Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday

US S&P Global Manufacturing PMI, Friday

Fed Bank of St. Louis President James Bullard speaks, Friday

A number of the essential moves in markets:


The Stoxx Europe 600 fell 0.2% as of 8:57 a.m. London time

S&P 500 futures fell 0.5%

Nasdaq 100 futures fell 0.5%

Futures on the Dow Jones Industrial Average fell 0.4%

The MSCI Asia Pacific Index fell 1.3%

The MSCI Emerging Markets Index fell 0.8%


The Bloomberg Dollar Spot Index rose 0.5%

The euro fell 0.8% to $1.0867

The Japanese yen rose 0.2% to 142.83 per dollar

The offshore yuan fell 0.3% to 7.2145 per dollar

The British pound fell 0.3% to $1.2710


Bitcoin fell 0.7% to $29,955.78

Ether fell 0.3% to $1,881.75


The yield on 10-year Treasuries declined seven basis points to three.72%

Germany’s 10-year yield declined 14 basis points to 2.35%

Britain’s 10-year yield declined 12 basis points to 4.25%


Brent crude fell 1.8% to $72.84 a barrel

Spot gold rose 0.3% to $1,918.82 an oz.

This story was produced with the help of Bloomberg Automation.

–With assistance from Denitsa Tsekova, Macarena Muñoz and Brett Miller.

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