— This is the script of CNBC's news report for China's CCTV on June 04, 2019, Tuesday.
In recent trading days, the global stock market continued to plunge, making the panic rise. The host just mentioned that the NASDAQ composite index fell more than 1.6% overnight, in fact, if we look back what happened in the last month.
We can see that over the past 30 days, the NASDAQ'S decline, represented by the purple curve in the chart, has exceeded 10% and has officially entered the technical correction. In addition, during the same period, the S&P 500 and the Dow Jones industrial average, represented by the blue and yellow lines, fell more than 6.8 percent and 6.3 percent, respectively.
As a result of the continued decline, money has been pouring into safe assets, and there are 3 flows of safety-heaven asset are very clear. First, one of the most traditional safe-haven assets, metal commodities like gold.
We've seen a huge increase in the price of gold recently, up 1.5 percent overnight, taking it to its highest close in three months.
In addition to gold, silver rose about 1.5% overnight to a two-week high. Platinum rose 4 percent overnight, also to a two-week high, while the metal posted its biggest one-day gain since early January 2017.
In addition to metal commodities, safe-haven currencies are also a destination for money. For example, the Swiss franc, one of the major safe-haven currencies, has also seen a strong rally recently
The euro, for example, hit a two-year low against the Swiss franc overnight, which means the franc has risen to its strongest level in two years.
The dollar, meanwhile, has continued to fall against the yen, which is down nearly 4% from its peak earlier this year, yen, another safety-heaven currency, goes strong recently.
And the third direction is US treasuries. Investors are buying long-term US treasuries at the fastest pace since the global financial crisis, driven down by global trade tensions, analysts say. We see this yield curve, the yield on the two-year U.S. Treasury note fell sharply till 3 June, US local time. Seven - and ten-year yields are much lower than recent treasuries, including that for one month and six month. This is called in economic theory as inverted yield, which is seen by many as a red flag of "economic crisis. As a result, the process of inverted yield has increased in recent days, leading many to believe that the fed has to start thinking about cutting rates.
Overnight, we saw BULLARD, the President of the St. Louis fed, who has a vote on the fed, saying that the fed may soon have a case for cutting interest rates to boost inflation. Bullard was the first fed official to talk to the markets so directly and explicitly, that has left the market more convinced that the fed will not stop cutting rates this year.
Currently, Federal funds futures show a more than 25 percent chance that the fed will begin cutting rates at this month's meeting, with a more than 63 percent chance that it will do so in July, nearly 98 percent chance that it will happen by end of Dec. so the market believe that it is a foregone conclusion that the fed will cut rates. So the fed meeting which will be held after 15 days is quite important and any change in the notes will draws attention from the market, we will keep an eye on this issue.