Stocks Rise Bonds Pressure

Stocks are Growing while Bonds Under Pressure

The situation in the world markets looks controversial. Shares are growing after strong reporting of companies. The shares of Alphabet (#Google) jumped by 3.6% after the market closed on Monday, bringing capitalization of the company to $870 billion on strong quarterly reporting, despite a big fine imposed by the EU. By capitalizing the search engine giant is at a striking distance of Amazon, the 2nd most valuable company after Apple.

In Asia, positive stocks dynamics is supported by news that Beijing will soften the fiscal policy, intending to spur the growth of the economy. The factor of positive dynamics of China looks strong in the short term, probably supporting the demand for risks at the start of trading on Tuesday.

In the calculation for a longer perspective, it is worth paying attention to the yields growth on debt markets and strengthening of safe-haven currencies. In the global market, the dollar grew on Monday, adding 0.3% against the backdrop of fears that the central Bank of Japan and the Eurozone would give up incentives at the time when world growth became less synchronous and robust. These fears fuel the sale of bonds, causing the yields increase.

This is a precondition for a dangerous situation. Bilateral trade tariffs additionally stimulate inflation, which is already close to the target levels or slightly exceeds them in some countries. The lowest unemployment rate in the decade will only accelerate this process.


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At the same time, fears around trade wars harm economic growth, which already shows a slowdown. As a result, global growth is becoming more fragile and less able to survive the tightening of monetary policy. In addition, high inflation will limit the ability of the CBs to stimulate growth.

This article was written by FxPro

Published by

Ed Anderson

Ed Anderson has over 35 years of experience in the financial markets, having worked in London, New York, Toronto, Singapore & Australia. His early career saw him as an Interbank Trader, Futures Trader & Voice Broker before he moved to electronic trading in the early 2000s. With extensive knowledge of leverage platforms and instruments and as the Chief Market Strategist at FxPro, Ed provides in-depth Fundamental and Technical Analysis, as well as frequent market insights on multiple asset classes, to the benefit of FxPro clients.