Bond Prices Rises as Global Slowdown Fears Surge

A rebound on Wall Street buoyed global equity markets on Tuesday, but lingering anxiety over world economic growth pushed more investors into safe-haven U.S. and German debt and slammed oil prices again.

Worries about a slowing global economy and fears of Ebola have made markets more volatile. The CBOE Volatility Index, or VIX, the market’s preferred gauge of anxiety, hit a high on Monday not seen since early June 2012. With Wall Street rebounding, the VIX fell 9 percent to 22.39.

An MSCI gauge of major stocks worldwide was up 0.3 percent after hitting an 8-month low earlier in the session.

Investors have turned more defensive due to worries about the U.S. Federal Reserve ending its bond-buying stimulus later this month, mounting risks of recession in the euro zone and a floundering Japanese economy.

These fears have pushed U.S. and German bond prices higher. The German Economy Ministry sharply cut its forecasts for economic growth for 2014 and 2015, and business sentiment fell in Europe’s largest economy.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza