Caijing reporter Wu Haishan Jin Wei / Wen Lu Lin / editor
On December 4, the US stock market dropped sharply. The S & P 500 index dropped 3.2% to 2700,06 while Dow fell 2.27% to 25027.07, Nasdaq dropped 7.8% to 3.8% .
(US funds fell on the board)
Among them the most significant decrease in technological resources is Apple's 4.4%, Amazon has dropped by 5.8%, AMD has dropped by 11%. At the same time, the financial sector fell 5.43%, Morgan Stanley 5.04%, JP Morgan Chase 4.46%, Citigroup 4.45%, Goldman Sachs 3.82%.
The global stock market, which has suffered from the US stock market, has dropped to a significant degree. Hong Kong's Hong Seng index dropped from 1.62% to 26,819.68, Hong Kong's HSCEI rose by 1.38% to 10,756.95. During the time of the press, Britain's FTSE 100 was 1.2%, Europe 50 was 1.27%, Nikkei-225 was 0.53%. China's Shanghai Composite Index dropped by 0.61% and reached 2649.81 while Shenzhen Composite Index dropped 0.32% to close at 7928.51.
On December 4, American stockpiles were unexpected. In spite of the deal between China and the United States on the cessation of trades, global stock exchanges have seen a big increase. But the good news on that day was not reflected in the US Treasury yield curve.
On December 1, US President Trump and Chinese President Xi Jinping reached an agreement to terminate the G20 summit. The United States agreed to postpone the initial tariff increases for 90 days, and China has agreed to purchase some products from the United States to reduce trade disparities.
Thanks to this innovation, the global stock market has seen a great growth. However, this tendency did not continue for several days, and the market's worry about the tendency of US bond yields re-entered into a drop in American funds.
On December 3, the US treasury yield was flat or even down. "It's suspicion that the February February events (for example, the US-US Trade Agreement) are a turning point in US-US trade relations," says Matt Wellner, a financial analyst at Jiasheng Group.
If China and the United States have not reached a long-term military agreement within 90 days, they can not halt the trade war, but only halt the trade.
On December 4, the yield of 10-year US bonds fell by 2.915%, down to the four-day trading day.
Under normal circumstances, in order to avoid the risk of stock market decline, funds go to the bond market and reduce bond yields. However, with favorable news and global stock market rallies, the US bond yields are still low, indicating that market risk appetizers are still low and that the funds still go to the stock market.
According to Matthew Weller, yields of American bonds remain on this basis. He said: "Although we are careful about the overall technical expertise of the fixed income market, profitability is about 3.25% as of the beginning of the quarter, as it suggests that the market may continue."
According to Morgan Stanley, the US 10-year treasury volume will drop to 2.75% by the end of 2019.
Even worse is the interest rates on US Treasury bonds, which is worrisome. On December 4, the yield of 2-year government bonds in the US declined to 2,799, and the spread between the US Treasury bonds declined to its lowest level since 2007. The US Treasury yields 2 and 3 years are higher than 5-year fiscal revenues. On December 4, 3-year US Treasury Bonds yield closed at 2.808% and the 5-year US Treasury Bonds totaled 2.791%.
Treasury yield curve is an important indicator of the US economy. Historically, the recovery of yield (2-year treasury treasury over 10-year treasury bonds) accompanied the downturn in the US economy. Now the US dollar interest rate inversion raises concerns about the fall of the US economy.
When the long-term interest rate is lower than the short-term interest rate, the yield curve is usually not good, and banks are hard to earn money, which is confirmed by a downturn in the US stock market yesterday, the Bearish Market of the US banking sector, "said Caijing reporter. Head of International Relations Department Hong Xin.
"The US economy is developing in the United States, Europe, Japan, or developing countries when the US economy deteriorates," said Chief Economist for Morgan Stanley Huaxin Securities Zhang Jun. This issue will weaken in the nearest interval and will see the strength of emerging market currencies.
The fall in US reserves has continued for some time. From October, Dow Jones Industrial Average has dropped to 10,5% from 26,953 peaks to 24,118. S & P and Nasdaq have shown a similar decline. Despite the voice of the market, did American funds enter the bear market?
Juan Jun, chief Chinese analyst at Jiasheng Group, says: "The current market trend is characterized by the growth and decline of the US stock market, the pattern of previous trends, and impact characteristics. The first Dow support on Shock Channel is located in 24100. The second support is located in 23,300 areas, two main support prices are not broken and the bear market is hard to reach. «
In addition, the positives of American funds are ignored.
Mark Chandler, head of the Harriman global currency strategy, believes that, despite the interest rate inversion, the US economy has not changed much in the past few weeks. The US financial situation is still close to the most comfortable history. He said: "Decrease in the yield of American bonds is similar to the restoration of pastoral trends, not a sign of economic crisis."
Meanwhile, the Fed predicts that the Fed's short-term money laundering cycle will expire, and in the first quarter the intensive growth rate will be halted. In 2019 Fed will double interest rates.
Zhang Jong also notes that the success of American companies is still in line with expectations and the bases are not so bad. "At the end of the year, if you see that the US economy is not so bad, then the funds go to the United States and go back to the American funds."
An unlucky economist, Cagejin, will have economic downturn when the yield of short-term government bonds is higher than long-term government bonds. But this is a signal that does not explicitly state what kind of recession is.
"While the United States is in crisis, the United States will be funded, for example, in the 2008 economic crisis, the United States has been funded," Zhang Yong said.
It should be noted that despite the fact that it has been decreasing for two consecutive months, the American stock market is not that bad.
Recent drop in international oil prices also affected the future of the US fund. International oil prices have dropped by 35% since October, which is a very important step in reducing costs and expanding US consumption.
Zhang Yong considers that "despite the fact that the cost of technological resources is considerably higher, the energy and utilities sectors are still good."
(Editor: Lee Linyin)