Daily Market Color

Global Government Yields Slide as Slowed Growth in China Raises Concerns

As more positive data from the U.S. Labor Department was released today, stocks declined and Treasurys rose as weak export figures from China sparked concerns over global growth.  In the U.S., initial jobless claims held steady at 43-year lows of 246,000 last week, marking the 84th straight week that claims have remained below 300,000, a level that has historically corresponded with a healthy labor market.  Additionally, import prices from last month increased 0.1% after falling 0.2% in August.  The shift adds evidence of a potential curbing of the 1.1% import deflation experienced over the past twelve months, which could ultimately lead to core price stabilization and inflation movement towards the 2% target.

Trade data in China revealed a 10% drop in exports, the country’s largest decline since February, compared to expectations of -3.3%.  Import figures also contracted as weaker demand at home and overseas continues to weigh on the economy, despite the Chinese yuan depreciating to six-year lows against the U.S. dollar.  The global impact of declining growth out of China stands as a primary concern with the Fed contemplating raising interest rates in the short term.  The yield on the 10-year Treasury note touched as low as 1.73% during the trading session as government debt yields from most major economies were lower on the day.

All three major U.S. stock indexes finished down between 0.25%-0.50% while Treasury yields/swaps rates fell 2-4 bps across the curve.  WTI crude oil is holding over $50/barrel after finishing up 0.5% on the day while Brent crude sits just above $52/barrel.  


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