Investors Rush to Havens Amid Credit Market Jitters
Global markets shifted sharply toward safety as traders piled into gold, silver, and Treasuries. Both gold and silver surged to new all time highs, reflecting growing anxiety over the health of the US credit market and intensifying US-China trade tensions. The rush into safe havens underscores how sentiment has turned defensive, with investors prioritising protection ahead of the weekend.
Treasury Yields Plunge as Dollar Weakens
US Treasuries extended gains, driving the two year yield to its lowest level since 2022, while the 10-year yield slipped below 4%. The US dollar weakened for a second straight day, and traditional havens like the yen and Swiss franc strengthened as risk aversion deepened. These moves highlight a broad retreat from risk assets as traders brace for volatility in the days ahead.
Credit Market Fears Trigger Nervous Wall Street Mood
Concerns about credit quality in the US financial system have reignited fears of instability on Wall Street. While analysts emphasise that the situation reflects liquidity and sentiment stress rather than systemic collapse, investor nerves are unmistakable. A combination of rising budget deficits, AI bubble fears, and a potential US government shutdown has left traders questioning whether the recent equity rally can hold.
White House Eyes Tariff Relief for Automakers
In Washington, reports suggest the White House is preparing to ease tariffs on the US auto industry, offering long-awaited relief to carmakers weighed down by import costs. The move could inject short term optimism into manufacturing sectors, though broader market sentiment remains cautious amid uncertainty over US-China trade relations and slowing global demand.
Trump-Putin Meeting Adds Geopolitical Complexity
President Donald Trump confirmed plans to meet Russian President Vladimir Putin in Budapest, following a lengthy phone conversation that came just before his White House meeting with Ukrainian President Volodymyr Zelenskiy. The back-to-back engagements are fuelling speculation about shifts in US foreign policy priorities, potentially influencing global risk sentiment.
Oil Extends Losses on Oversupply and Trade Worries
Oil prices remain under pressure, with Brent crude hovering near $61 a barrel. Traders cite concerns about rising global inventories and slowing demand due to renewed US-China trade tensions. Expectations that OPEC+ members could increase production following Trump’s discussions with Putin added further downward pressure, pointing to persistent fragility in the energy market.
Market Outlook: Risk Management Back in Focus
As the trading week draws to a close, markets appear caught between policy optimism and economic fragility. With credit fears mounting, trade tensions resurging, and global yields plunging, traders are shifting from chasing returns to preserving capital. For investors, the message is clear vigilance and risk discipline will be crucial as financial markets navigate another wave of uncertainty.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.