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Investors fear global economic collapse

Yields on long-dated U.S. Treasury securities fell to their lowest in nearly a year on Wednesday on concerns about the health of the global economy, a worry exacerbated late in the day when Apple Inc (AAPL.O) cut its sales outlook and sent U.S. equity index futures tumbling. Throughout the first trading day of 2019 investors piled into safe-haven investments like longer-dated Treasuries and German bunds after weak data out of China and Europe was reported overnight and a partial shutdown of the U.S. government continued.

Yields on benchmark 10-year notes US10YT=RR fell to their lowest since late last January. They hit a fresh 11-month low near 2.62 percent late in the day when Apple announced sales would fall well short of previous forecasts largely because of a slowdown in demand for its iPhones in China. China’s economy was already of central concern after a measure of its manufacturing activity shrank for the first time in 19 months in December, hit by the Chinese-U.S. trade war, with the weakness spilling over to other Asian economies.

Other safe-haven investments also benefited in price from the flight to quality. The benchmark 10-year German government bond yield DE10YT=RR was down 7 basis points, last at 0.17 percent. Oil prices rose about 4 percent in choppy trading on Wednesday, supported by gains in U.S. equity markets, but concerns remained about rising crude production and weakening global economic growth.

Global growth worries, higher oil flatten yield curve, Reuters, Jan 03

Source: FxPro

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