Here are the top five things you need to know in financial markets on Friday, July 1:
1. U.S. bond yields plunge toward record lows
Yields on 10- and U.S. 30-Year U.S. Treasuries plunged on Friday to 1.382% and 2.194%, respectively, within striking distance of record lows.
Investors were pouring into sovereign bonds worldwide which bond guru Mohamed El-Erian suggested was a reflection of weaker economic growth and dovish central banks.
2. Global stocks mixed ahead of U.S. holiday weekend
Global stocks were mixed on Friday as investors weighed the positive close on Wall Street, a worrisome read on manufacturing activity in China, and positive reads in the euro zone and the U.K.
Asian shares rose on Friday despite a disappointing China manufacturing survey from Caixin and an otherwise busy regional data day with investors taking a cue from U.S. gains overnight and prospects for easier monetary policy in Britain post Brexit.
European equities were trading mixed after a lower open with most investors taking a breather from the recent post-Brexit rally.
U.S. futures also pointed to lower open on Friday, with market participants apparently wishing to avoid leaving positions open ahead of the Fourth of July holiday on Monday. At 10:02AM GMT, or 6:02AM ET, the blue-chip Dow futures lost 38 points, or 0.21%, S&P 500 futures fell 6 points, or 0.26%, while the Nasdaq 100 futures traded down 23 points, or 0.12%.
3. Fed’s Bullard sticks to one rate hike view, ISM manufacturing ahead
St. Louis Federal Reserve Bank president James Bullard stuck to his view late Thursday that the U.S. monetary authority would only need one rate hike and played down concern over the impact of the U.K.’s exit from the European Union, known as a Brexit.
Markets are convinced that Fed will not hike rates this year with Fed fund futures beginning to contemplate the possibility of a cut. The probability of 25 basis point reduction at the July meeting was at 1.2% late Thursday.
Investors looked ahead to the ISM manufacturing data for June as well as a speech from Cleveland Fed president Loretta Mester.
4. Gold jumps on Brexit uncertainty and China worries
Gold prices jumped over 1% on Friday, still hovering close to the previous week’s 27-month highs as continued uncertainty following the Brexit vote and concerns over a slowdown in China lent support to the safe-haven precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery rallied 1.08% to $1,334.85.
5. Oil drops on profit-taking, economic concern and supply worries
After oil closed on Thursday with nearly a 25% quarterly surge, its largest in seven years, investors opted to take profits in Friday’s session as the Chinese economy continued to show malaise, causing worry over demand.
Traders also showed concern over improvements on U.S. shale oil as a Reuters’ report showed that crude output decline rates were dropping.
A separate report also suggested that the global overhang could hamper prices well into 2018.
U.S. crude oil futures lost 31% to $48.18, at 10:04AM GMT, or 6:04AM ET, while Brent oil dropped 0.26% to $49.58.