ECONOMY
U.S. stock futures, Asian share markets and oil prices slipped to multi-month lows on Monday on mounting worries growing Sino-U.S. tensions and Washington’s new tariff threats against Mexico could tip the global economy into a recession.
British manufacturing growth has weakened over the past couple of months as European companies decided to divert supply chains away from the world’s fifth-biggest economy while the Brexit crisis rumbled on, an industry survey showed on Monday.
South Korea’s factory activity contracted at its fastest pace in three months in May, a survey showed on Monday, reversing the previous month’s brief expansion, as new orders fell amid an intensifying Sino-U.S. trade dispute, which hurt export demand.
Japanese business investment rose in January-March, continuing the run of growth seen over the past two years although signs of slowing momentum have raised concerns about the strength of business activity amid mounting global economic risks.Economists expect Japan’s growth to slow in the current quarter reflecting weak demand both at home and abroad.
Mexican Economy Minister Graciela Marquez said on Sunday she would meet with U.S. Commerce Secretary Wilbur Ross in Washington on Monday, as the two governments begin holding talks to resolve the issue in the U.S. capital in the coming week.
BONDS
Both longer-dated maturities fell the most in a month since Jan. 2015. Debt prices move in the opposite direction of yields.
The 2-year note yield -1.05% which is more sensitive to shifting Fed expectations, plunged 13.6 basis points to 1.937% to mark its biggest daily drop in a year. The short-dated maturity fell 23.8 basis points this week and 33.1 basis points for the month, marking its largest monthly drop since Nov. 2008.
The 10-year Treasury note yield -0.05% tumbled 8.9 basis points to a 20-month low of 2.139%, extending its weekly drop to 18.9 basis points and its monthly drop to 36.7 basis points.
CURRENCY
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, lost 0.45% to 97.58 by 10.55 am ET.
The safe-haven yen held firm. The dollar changed hands at 108.22 yen, having dipped to as low as 108.17, its weakest level since mid-January.
The euro, which has been declining at a steady pace this year, was little moved $1.1179, off last week’s low of $1.1116.
The Mexican peso, hit by Trump’s sudden threat to impose tariffs on Friday, regained some stability, trading at 19.6355 to the dollar, after its 2.5% fall on Friday.
The Chinese yuan traded at 6.9418 per dollar, near 5-1/2-month lows of 6.9497 touched on May 17.
COMMODITY
Oil prices fell more than 1% on Monday to extend losses of over 3% from Friday, when crude markets racked up their biggest monthly losses in six months amid stalling demand as trade wars fanned fears of a slowdown in the global economy. Front-month Brent crude futures, the international benchmark for oil prices, were at $61.23 . That was 44 cents, or 0.71%, below last session’s close. U.S. WTI crude futures were at $52.95 per barrel, down 55 cents, or 1.03%.
Gold trading at $1316 by 10.55 am ET, Risk appetite deteriorating amid rising trade war concerns, creating a fundamentally bullish situation for gold prices.
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