Suffice to say growth concerns and the “catch down” to Wall Street’s abysmal Friday session easily outweighed whatever bounce overseas stocks “should” have gotten from Donald Trump’s exoneration in the Mueller probe.
If bonds were things that could scream, they would be be shouting about slowing growth and that, in turn, has folks spooked from New York to Tokyo and back again. We went over this on Sunday and also on Friday, when things fell apart. And now here we are going over it again, because that’s what we do.
Monday was the same story, although things look to have calmed down a bit after upbeat Ifo data out of Germany helped allay fears following Friday’s abysmal manufacturing read. Aussie and Kiwi yields dropped to fresh all-time lows on Monday and JGB yields pushed against -0.10%.
Asian equities were summarily routed. The Topix dove 2.5% for its worst session since December.
Volatility spiked in Japan.
It was a similar story pretty much across the board. Hong Kong shares dove more than 2% in the second worst day of the year for the Hang Seng.
Mainland shares were not spared, with the SHCOMP and the CSI 300 both falling 2% or more.
The dour mood abated a bit after German Ifo beat across the board, perhaps helping to soften the blow from Friday’s lackluster data. Business confidence printed 99.6 in February, ahead of consensus (98.5) and better than the highest estimate.
Obviously, it’s going to take more than that for everyone to sound the all-clear on the German economy, but at this point, euro-area watchers and anyone who is concerned about the outlook for global growth will take whatever they can get.
The overarching point on Monday is that whatever bounce one might have expected from a lifting of the Mueller cloud over the (probably bald) head of Donald Trump didn’t materialize thanks to i) the predictable Asia “catch down” and more importantly ii) pressing concerns about the global economy as manifested in an ongoing (and increasingly ferocious) bond rally.
