Stock markets drop and bonds were in demand on Thursday

Stock markets fell and bonds were in demand on Thursday as worries grew about a second wave of coronavirus infections and a dour assessment from the head of the U.S. Federal Reserve dashed hopes for a quick economic recovery.

“The path ahead is both highly uncertain and subject to significant downside risks,” Fed Chair Jerome Powell said in a webcast speech.

He warned of a recession worse than any since World War Two, and called for additional fiscal spending to stem the fallout from the pandemic – a pointed comment from a central banker who has avoided giving advice to elected officials.

New outbreaks in South Korea and China were cause for concern, even as more countries begin to re-open their economies after lengthy lockdowns.

Stock markets

  • FTSE futures (FFIc1) and EuroSTOXX 50 futures (STXEc1) dropped about 0.5%.
  • The S&P 500 (ESc1) struggled to lift much above flat.
  • MSCI (NYSE:MSCI)’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell 1%.

Bonds

  • The yield on 10-year Treasuries sank three basis points to 0.63%.
  • The yield on two-year Treasuries climbed less than one basis point to 0.16%.
  • Germany’s 10-year yield fell one basis point to -0.54%.
  • Britain’s 10-year yield declined one basis point to 0.2%.
  • Japan’s 10-year yield dipped less than one basis point to -0.003%.

Commodities

  • Gold pulled back from a one-week high hit early in the Asian session, but held comfortably above $1,700 an ounce at $1,711.20.
  • Brent crude (LCOc1) firmed slightly to $29.36 per barrel and U.S. crude (CLc1) was up 1% at $25.58 per barrel.

Currency

  • The euro dipped 0.1% to $1.0808.
  • The British pound sank 0.2% to $1.2202.
  • The onshore yuan weakened 0.1% to 7.098 per dollar.
  • The Japanese yen strengthened 0.2% to 106.83 per dollar.

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