 After the much more dovish than expected Fed economic projections and shockingly poor Eurozone manufacturing data, it looks like major world economies are at the brink recessions. German 10-year bund yield turned negative for the first time since 2016, and it was as high as 0.12 during the week. US yield curve between 3-month and 10-year is now inverted, with 10-year yield in free fall. While the market reactions might be exaggerated, sentiments are undoubtedly very fragile at the moment. In the currency markets, Yen and Swiss Franc ended as the strongest ones of falling global yield and risk aversion. That's not much a surprise. On the other hand, Canadian Dollar was the weakest ones, partly because WTI crude oil failed to sustain above 60 and retreated. But more importantly, it was argued that Canadian economy is facing more intense-than-expected moderation in the economy. If US would be in recession, Canada will only be worse. Sterling was the second weakest while Euro was the third. Despite very dovish Fed, Dollar ended the week mixed only. |
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