US treasury yields are at their the lowest since September 2017 and German bund yields are at two-and-a-half-year low
London — With no sign China-US trade tensions will let up and fears of an Italy-EU confrontation growing again, the global bond rally accelerated on Wednesday, as investors dumped shares and scurried for the safety of German and US government debt.
Chinese newspapers responded on Wednesday with a warning that Beijing could use rare earths to strike back at the US. “Then we have a weaker growth outlook ... so we have the negative shock of trade added to lower growth and the cushion of protection isn’t as good as it was eight to nine months ago.”
In Britain, many reckon risks of a hard Brexit — crashing out of the EU without a trade agreement in place — have risen, because candidates lining up to succeed Prime Minister Theresa May are mostly eurosceptic. US rates futures are pricing in two cuts by the Federal Reserve by the middle of next year to help prop up the country’s economy. Data this week showed a gauge of US manufacturing activity unexpectedly fell in May from the previous month.
Some of the flows into bunds are being spurred by an escalation between Italy’s ruling coalition and the EU, which is said to be considering punishing Rome for excessive spending.
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