Global markets struggled on Monday after key indicators in China and the U.S. dragged them lower, reports The Wall Street Journal’s Nick Cawley and Shen Hong. China’s Shanghai Composite Index fell 5.3 percent, which was its largest drop in a single day since August 2009 and its lowest level since December. U.S. Treasury yields on 10-year bonds jumped above 2.63 percent. It’s the first time in almost two years that the yields have been that high.
Global Market Ripples In The Euro-Zone
Although last week’s ripples in the world’s economies were larger, the damage was still significant. Government bonds in Australia fell to their lowest level in more than a year. The Australian dollar also fell to its lowest level in 33 months.
Government bonds from several nations in the Eurozone fell lower. The yield on Spain’s 10-year bonds reached almost 5 percent, which is their highest level since April. Italian bonds and even German Bunds, which were considered a safe haven in the Euro-zone, also fell on Monday.
Ripples In Asia
In China, short-term interest rates were still significantly over their historical averages, and China’s central bank issued a statement. It indicated that Beijing may use the nation’s financial woes to slash systemic risks.
According to analysts, this statement added even more concerns about China’s small and medium sized banks. Among the largest retreat in the nation’s markets on Monday were the stocks of medium sized Chinese bank.
Impacts Of U.S. Treasury Bonds
Today also saw a new drop in bond prices of U.S. Treasuries, further signaling the possibility of the Federal Reserve deciding to begin tapering off its bond-buying program. It’s expected that the Fed will begin winding down its $85 billion per month bond purchasing program by the end of this year.
The U.S. dollar also soared to fresh highs, hitting its highest level in two weeks against the yen. It also held up strong against South Africa’s rand, which hit its lowest level since March 2009, and Turkey’s lira.