Sunday , October 2 2022

Stocks & USs plummet! US bonds increase the worries in the recession – News – The Global Trade of IC starts –


Correspondent Caijing Wu Haishan Jin Wei / Wen Lu Ling / editor

On December 4, the US stock market fell sharply. The S & P 500 Index was 2700.06, down 3.2%; Dow closed on 25027.07, down 3.1%; Nasdaq closed at 7175.43, down 3.8%.

(The stocks fell across the board)

Among them, the most obvious decline in technology stocks, Apple fell 4.4% on the day, Amazon dropped 5.8%, AMD fell by almost 11%. In addition, the financial sector had also suffered a refusal, Bank of America was down by 5.43%, Morgan Stanley fell from 5.04%, JP Morgan Chase fell 4.46%, Citigroup fell 4.45%, Goldman Sachs fell 3.82%.

After affected by the US stock market, global stock markets have fallen to varying degrees. Hang Seng Hong Kong Index fell by 1.62% to 26,819.68; HSCEI Hong Kong dropped 1.38% to 10,756.95. As a press time, FTSE opened 100 percent of the UK down 1.2%, Europe opened 50 1.27%, and Nikkei 225 down 0.53%. China's Shanghai Composite Index rejected 0.61% to close on 2649.81, and the Shenzhen Comprehensive Index 0.32% dropped at 7928.51.

The decline in the US stocks on December 4 was unexpected. Despite the trade agreement of the previous day between China and the US, global stock markets have seen a big increase. But on the same day, this good news was not reflected in the US Treasury product curve.

On December 1, US President Trump and Chinese President Xi Jinping arrived at a commercial resistance agreement at the G20 conference. The United States agreed to defer the original tariff dispersion for 90 days. China agreed to buy some products from the US to reduce trade imbalance.

After boosting this news, global stock markets have seen a big increase. However, this trend did not last for a few days. Market concerns about the tendency of bond products in the US mean that stocks and US re-enter the trend down.

On December 3, US Treasury products were flat or even. "This shows that smart money is skeptical about whether the developments last weekend (ie, the Sino-US trade agreement) indicate a turning point in Sino-UDA trade relations," said Matt Weller, Financial Analyst Chartered Group, Jiasheng.

The market worries that China and the US can not reach a long-term armistice agreement within 90 days, the agreement will not stop the war of trade, but only prevent the increase in the trade war.

On December 4, the US $ 10 bond product benchmark decreased to 2.915%, which has dropped for four consecutive trading days.

In normal circumstances, when the stock market reduces, in order to avoid risks, money will flow into the bond market and reduce bond products. However, in the case of favorable news and the global stock market rally, US bonds are still lower, stating that market risk appetite is still high, and there are still funds flows to the bond market.

Matt Weller also believes that bonds and US products will continue to fall on this basis. He said: "Whilst we are careful about the general technical analysis of the fixed income market, the product is likely to have built a double model model around 3.25% earlier in the quarter, suggesting that market could go further. "

Morgan Stanley predicts that the US 10-year Treasury product will fall to 2.75% by the end of 2019.

Not only that, but what is even more worrying is that interest rates on US Treasury bonds face back. On December 4, the product increased on the 2-year US government bond to 2.799, and the spread between the US Treasury's 10-year bond was limited to the lowest level since 2007. The US Treasury 2 years and 3 years higher than the 5 year Treasury product. On December 4, the product on US Treasury 3 year bonds ended at 2.808%, while the US 5 year Treasury bond was 2.791%.

The Treasury product curve is a very important indicator for the observation of the US economy. Historically, a product collision (a Treasury 2 year product above 10-year Treasury bonds) has brought a recession into the US economy. So, now, the collision of US debt interest rates has caused the market to begin to worry if the US economy will come into the recession.

"Usually, the scope of the product fund is not good for the bank's earnings. When the interest rate is ultimately lower than the short-term interest rate, it is difficult for banks to make money. This also has & # 39; to confirm by the decline in the stock market board yesterday yesterday. The US banking sector has registered a market port Technology. "Hong Ying, head of the International Communications Bank's International Research Department, said to the Caijing reporter.

"When the US economy declines, money will flow from the US and Europe, Japan, or emerging economies better," said Zhang Jun, chief economist at Morgan Stanley Huaxin Securities. This point has weakened by the recent period, and the strength of the emerging market currency can be seen.

The decline in US numbers has been happening for some time. Since October, the Dow Jones Industrial Average has dropped from a climax of 26,953 to a minimum of 24,118, a 10.5% decrease. Indices S & P and Nasdaq also showed similar discounts. Even the voice in the market has started to discuss whether stocks and US have entered a bear market.

Huang Jun, Chinese chief analyst of Jiasheng Group, said: "The current market trend is characterized by the rise and resistance of the stock market in the United States, eliminating the previous upgrade pattern and entering & # 39; The shock features are in the shock channel, the first Dow support in the 24100 area. Second aid is in the 23300 area. Both key help prices are not broken and it's hard step into the market bear. "

At the same time, positive stocks of the United States can not be ignored.

Marc Chandler, head of the global foreign exchange strategy in Brown Brothers Harriman, believes that despite the interest rate collision, the US economy has not changed much in recent weeks, The situation is still close to the most relaxed state of history. He said, "The disadvantage of bonds & US products is more likely to reverse the trend of apartment, not a sign of economic recession."

At the same time, the market also anticipates that the Fed's financial tightening cycle will end, and hike speeds in the first quarter will be stopped. The most predictable is that the Fed will raise interest rates twice in 2019.

Zhang Jun also believes that the profitability of US companies is still in line with expectations, and the essentials are not so bad. "At the end of the year, if you find that the US economy is not so bad, then the money will still return to the US, and it's possible to stream up to stocks . "

An economist unknown to Caijing said that when the short-term government bond product is higher than the long-term government bond rate, the economic downturn will follow. But the problem with this signal is that it does not tell people exactly when the recession takes place.

"Even if the US really has a crisis, money will flow back to the US. For example, in the 2008 economic crisis, money came into the US." Zhang Jun said.

It can be seen, although there has been a decline for almost two consecutive months, the US stock market is not as bad.

The recent decline in international oil prices has also added to the future of US stock. Since October, the international oil price has fallen by 35%. This is a very positive positive for enterprises, which are favorable to enterprises to reduce costs and expand US use.

Zhang Jun believes "although the valuation of technology stocks is just too high, the energy and public utility sectors are still good."

(Editor: Li Linlin)

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