The rapid repricing reflects the fear sweeping global markets, with US President Donald Trump showing little appetite to back down on aggressive trade tariffs announced last week. He told reporters on Sunday evening to “forget markets for a second”.
Investors are dumping risk and snapping up bonds, sending yields plummeting. The yield on the US two-year bond, among the most sensitive to monetary policy, fell as much as 22 basis points to 3.43% on Monday, having fallen about 50 basis points in total since Trump announced the levies last Wednesday.
“There is no good news. The markets are getting ugly,” said Michael Brown, senior research strategist at Pepperstone. “A policy pivot, from either the White House, or the Fed, is what the market craves. Neither, for the time being, seems especially likely, leading to more economic, and market, pain being on the cards.”
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Chart: Bloomberg
