Treasuries fall as money rushes to stock market

Monday, 19. August 2019 11:22

So-called safe haven assets suffered on Monday since investors didn't want to miss out on returns they expect from equities under the massive stimulus that is likely being prepared by central banks around the world. Sovereign bonds sharply dropped, sending yields up, and gold and silver faltered as Germany's Federal Minister of Finance and Vice Chancellor Olaf Scholz particularly encouraged market participants. He has expressed determination to protect the economy in case of a downturn and hinted the cabinet would make a shift from the current fiscal discipline with a €50 billion public spending package.

Stocks were also underpinned by United States President Donald Trump and White House officials, who have claimed consumption is strong and that the economy is strong. A severe selloff on Wall Street and major exchanges was reversed last week as he decided to roll back some of the planned measures in the trade war with China. Also of note, the most populous economy is reforming the corporate tax code as it says it wants to help domestic companies.

The two-year US yield jumped 3.6 basis points to 1.525% at 5:19 am ET. The ten-year Treasury rate surged 5.8 points to 1.617% and the 30-year gauge was seven points higher at 2.106%. Corresponding futures prices sank 0.09%, 0.33% and 0.76%, respectively.

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