On Monday, U.S. markets closed with a mixed performance as disappointing Chinese and New York state data stoked worries of a recession, but the 10-year Treasury note's yield remained securely below 3 percent, bolstering expectations that the Federal Reserve will gradually increase interest rate hikes.
Chinese retail and factory activity dropped substantially in April as COVID-19 lockdowns severely disrupted supply chains, while New York's factory output declined for the third time this year in May as new orders and exports collapsed.
The Chinese numbers threw a long shadow over the second-largest economy in the world, while the sharp decline in New York manufacturing could be an early indicator of the impact of the Fed's efforts to tighten monetary policy to combat swiftly growing inflation.
MSCI's global stock index closed down 0.21 percent, while Treasury rates declined, with the benchmark 10-year note down 4.7 basis points to 2.886 percent after reaching 3.2 percent a week earlier. Some view the subsequent fall as evidence that the market has priced in all or almost all of the anticipated Fed rate hikes.
Tom Hayes, chairman and managing member of Great Hill Capital LLC, stated that the 10-year yield has remained below 3 percent as the most significant current market development.
The fact that five Fed officials are scheduled to speak on Tuesday is also crucial in light of the recent market decline, he said.
"Usually, when you have five Fed speakers and the market is near a bottom, they're not there to talk the market down," Hayes said.
With favorable earnings growth and a more acceptable price-to-earnings ratio, he said, equities are more desirable.
The pan-European STOXX 600 index closed unchanged, up 0.04 percent, with decreasing German and French indexes and a rising British FTSE 100.
On Wall Street, the Dow Jones Industrial Average increased 0.08 percent, while the S&P 500 declined 0.39 percent and the Nasdaq Composite fell 1.2%.
Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, stated that China and Europe, notably eastern Europe and Putin's threats against Finnish and Swedish intentions to join NATO, continue to be issues.
"When you see strong up days, it's not surprising to see profit-taking the next day," Ghriskey added, alluding to Wall Street's gain on Friday. "This is simply a response to recent strength. There are several reasons driving the market, but none of them are particularly encouraging."
Goldman Sachs (NYSE:GS) increased its profits per share growth projection for 2022 from more than 5 percent to 8 percent, but lowered its year-end target for the S&P 500 from 4,700 to 4,300 due to interest rate and growth concerns.
Former Goldman Sachs CEO Lloyd Blankfein stated on Sunday that he believes the U.S. economy is at risk of entering a recession as the Federal Reserve continues to boost interest rates to combat growing inflation.
After reaching a 20-year high last week, the dollar declined marginally.
The dollar index declined 0.316 percent, with the euro rising 0.18 percent to $1.0431 per dollar and the Japanese yen strengthening 0.09 percent to 129.07 per dollar.
According to Bipan Rai, head of FX Strategy for North America at CIBC Capital Markets, the dollar is likely to increase due to the macroeconomic outlook, whose fundamentals are not positive.
"From a risk-averse standpoint, this should continue to boost the dollar against the majority of currencies," said Rai.
Nevertheless, the dollar is consolidating following its recent surge, and additional range-bound trading days are possible, he said.
The euro was near its lowest level since 2017 at the time. Francois Villeroy de Galhau, a policymaker at the European Central Bank, stated that the euro's depreciation might endanger the central bank's efforts to steer inflation toward its objective.
Gold rose little as falling Treasury yields offset headwinds from a relatively strong dollar and the potential of interest rate hikes, which had pushed bullion to a more than 3-and-a-half-month low.
Futures on gold in the United States closed up 0.3% at $1,814 per ounce.
Oil prices increased as the European Union moved closer to a ban on Russian oil imports and as traders observed signs that the COVID-19 pandemic was receding in China's hardest-hit regions, indicating a big demand recovery was imminent.
Brent crude prices increased $2.69 to close at $114.24 per barrel, while U.S. crude futures rose $3.71 to $114.20 per barrel.
Bitcoin lost 5.21 percent to $29,664.88 most recently.
Yields on European government bonds increased, with Germany's 10-year yield falling 0.9 basis points to 0.943 percent - below the almost eight-year high of 1.19 percent it set on Monday.
Pablo Hernandez de Cos, an ECB policymaker, stated on Saturday that the ECB will likely decide at its upcoming meeting to cease its stimulus program in July and to raise interest rates "quite shortly" afterward.
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