Market developments
Equities:
Wall Street experienced a significant selloff this week, with the Nasdaq 100 entering into correction territory (down 10% from its peak) and the S&P 500 on track for its worst reaction to jobs data in almost two years. The selloff was driven by concerns over big tech earnings and a weak jobs report, which stoked fears that the Federal Reserve’s high interest rates might be risking a deeper economic slowdown. The VIX Index soared to its highest level since March 2023, signaling increased investor anxiety.
Fixed income:
Treasury yields tumbled as the weak jobs report fueled worries about economic slowdown. The ten-year Treasury yield declined 18bpsto 3.80%. Traders are now projecting that the Federal Reserve will cut rates by a full percentage point in 2024, with some even anticipating a large 0.5% move at September’s meeting.
Commodities:
Oil prices slumped to their lowest levels in almost seven months, with Brent crude falling to $77 a barrel. The decline was driven by concerns about demand in the world’s two largest economies, the US and China, as manufacturing gauges in both countries showed contractions. This overshadowed heightened geopolitical risks in the Middle East.