In recent months, news and speculations have emerged that the global economy is heading to a recession. Amid fears of recession, the US dollar slid backward in October for the three sessions in a row as ISM Services data failed to meet market expectations. The US dollar index plummeted by 0.2% and closed at 98.87.
In mid-September, Euro Zone bond yields slid as a result of oil uncertainty. At that time, news broke that a Saudi Aramco crude facilities were attacked by a drone. The incident caused the longer-dated euro zone bond yields to plunge on September 16. Additionally, poor data released by China also favored the demand for safe-haven assets.
In the meantime, Portugal’s 10-year bond was also under-performing. The yield was up 2 bps after S&P raised the stance on the sovereign’s BBB rating to positive on September 13. The gap that existed between Portugal and the better-rated Spain’s 10-year bond yields reached a record low of -5 basis points in the previous week.
Two months later, the news about the global recession is yet to leave the headlines. In that context, some commentators have even gone ahead to suggest that crypto will be the solution when the next financial crisis hits.
The French Scenario
On November 6, France’s benchmark 10-year bond yield reportedly turned positive. The yield got into positive grounds for the first time since July this year. This comes as an additional sign that entrenched pessimism in world bond markets is reducing gradually.
Hopes are increasing for the progress in the US-China trade talks. Moreover, there are signs of stabilization in economic data. That, in turn, has triggered selling in the Euro Zone bond markets. The French 10-year bond yield rose to as high as 0.001% which moved it into positive zone for the first time since July 2019.