Investors hardly want to risk switching to safe havens again

Posted 04 July, 2019

The agreement that was achieved between Washington and Beijing at the G20 Summit failed to promote a long-lasting demand for risk. For now, investors are still full of concerns and thus prefer to buy safe havens. Such situation pushed prices for the gold above the psychological level of $1,400 with Japanese yen moving up. The yield of US Treasuries lost 2%.

However, the positive mood that appeared after the meeting of the leaders of the world's major economies was hardly long-lasting. The sentiments changed when investors checked Manufacturing PMI results. The figures showed that Asian and Europe has problems in this sector. With the new threats of import duties on EU products in the USA, investors refrain from acquiring risk assets. In general, effective sanctions keep affecting the global economy.

The risk of the downward movements in the market given reasons to believe that even-bigger economic slump is ahead. Still, it is unknown whether the central banks have enough means to ease the plunge, and it will become clear only within some period of time. 

As a result, the optimism is very fragile in the market, while the US-China trade conflict remains in the spotlight affecting global economic growth outlook.

At present, traders are waiting for the release of the US labour market report since these figures can help them understand the next move of the US Fed at its regular meeting next month. In particular, if the labour market shows below-expectations results, the reduction of the interest rates will become even more real. Another important driver will be non-farm payroll report in the USA that is likely to be posted this Friday. It is expected that the number of new jobs will be 164,000 following the increase of 75,000 in May.

Next forecast

19 June, 2019 13:51

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