March 27, 2019 Global Outlook Dims; Bonds are Lovin' It by Lester Murray

Global growth concerns have regenerated themselves following a worrisome assessment from Mario Draghi, President of the European Central Bank. More Euro stimulus is needed, according to Mr. Draghi, and his concern over benchmark German sovereign debt re-entering negative territory is palpable.

This morning, his concern has made its way to our shores and a pretty frisky bond rally is underway. Yields have fallen all along the curve with the Ten Year now around 2.35% and 2.85% for the long bond. On the short end, the Two Year has dipped below 2.20. As for the shape of the yield curve, it still sags in the middle like a broken down couch. Economic data of late has done nothing to dissuade the negative tone. Disappointing news on Housing Starts and Home Prices along with a mixed bag of manufacturing reports only serves to bolster the perception of slowdowns ahead. Consumer Confidence has slipped a bit, and a bit more than expected. A revision to Q4 GDP comes out tomorrow and a mild downward adjustment is likely. If the downward adjustment is more than mild, market reactions may not be.