Central banks around the globe stunned investors by cutting their rates on fear over trade and currency wars. US stock index futures slumped and bondsrallied globally as investors continued to seek safe haven, fearing the ongoing trade tension will spur a global recession. New Zealand surprised by cutting their benchmark rate by 50 bps when a 25 bps cut had been expected. Also, Thailand cut their rate by 25 bps, and India lowered their rate by an unconventional 35 bps. These dovish actions fueled by concerns of the escalating trade war, sent the yield on 30-year US Treasury south, closing in on their all-time low of 2.0882% from July 2016. German rates also dropped to a fresh record as industrial production printed the biggest annual decline in almost a decade. President Trump reiterated his stance by urging the Fed to cut rates “bigger and faster” in his tweet. Elsewhere, WTI crude extended a loss this morning, trading below $52 a barrel. MBA Mortgage Applications Index rose 5.30% last week after falling 1.40% in prior week. Purchases declined 2.00% and refinances increased 11.80% after falling 3.00% and rising 0.10% in prior week, respectively. Later today, the US Treasury is scheduled to auction off $27 billion of 10-year notes at 10:00 AM (PT).
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Central banks around the globe stunned investors by cutting their rates on fear over trade and currency wars. US stock index futures slumped and bonds rallied globally as investors continued to seek safe haven, fearing the ongoing trade tension will spur a global recession. New Zealand surprised by cutting their benchmark rate by 50 bps when a 25 bps cut had been expected. Also, Thailand cut their rate by 25 bps, and India lowered their rate by an unconventional 35 bps. These dovish actions fueled by concerns of the escalating trade war, sent the yield on 30-year US Treasury south, closing in on their all-time low of 2.0882% from July 2016. German rates also dropped to a fresh record as industrial production printed the biggest annual decline in almost a decade. President Trump reiterated his stance by urging the Fed to cut rates “bigger and faster” in his tweet. Elsewhere, WTI crude extended a loss this morning, trading below $52 a barrel. MBA Mortgage Applications Index rose 5.30% last week after falling 1.40% in prior week. Purchases declined 2.00% and refinances increased 11.80% after falling 3.00% and rising 0.10% in prior week, respectively. Later today, the US Treasury is scheduled to auction off $27 billion of 10-year notes at 10:00 AM (PT).
The curve has bull-flattened with UST 10-Year yield down 9.09 bps.