GLOBAL MARKETS-Stocks shaken, bonds surge as Trump risks recession

GLOBAL MARKETS-Stocks shaken, bonds surge as Trump risks recession
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* Asian stock markets : * Trump menaces Mexico with tariffs in surprise tweet * Markets see recession risk, price in deeper Fed rate cuts * China PMI disappoints with drop to 49.4 in May * S&P 500, European stock futures in the red * Asia shares draw month-end demand in wake of steep losses * Bonds jump on safe-haven rush, U.S. yields at fresh lows SYDNEY, May 31 (Reuters) – U.S. stock futures slid and sovereign bonds surged on Friday as investors feared President Donald Trump’s shock threat of tariffs on Mexico risked tipping the United States, and maybe the whole world, into recession. The investor mood darkened further when a key measure of Chinese manufacturing activity for May disappointed, raising questions about the effectiveness of Beijing’s stimulus steps. Markets moved aggressively to price in deeper rate cuts by the Federal Reserve this year, while bond yields touched fresh lows and curves inverted further in a warning of recession. Washington will impose a 5% tariff from June 10, which would then rise steadily to 25% until illegal immigration across the southern border was stopped. Trump announced the decision on Twitter late Thursday, catching markets completely by surprise. “The mercurial President Trump has signalled via Twitter this morning that his mindset is shifting ever farther from reaching trade deals,” warned Eleanor Creagh, a strategist at Saxo Capital Markets Australia. “It seems now that market participants are finally realising that the narrative of an H2/19 recovery is fast dissipating,” […]

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