Morning Commentary: G7 Interest rates – Nearing Rock Bottom?

Foreign Exchange - Morning Commentary

G7 Interest rates – Nearing Rock Bottom?

Share this story:
Alan Rose
Alan Rose
Foreign Exchange Senior Trader
Over the past few days, markets have been consumed with the fear of an impending global slowdown spreading to U.S. shores. U.S. interest rates have fallen sharply in the past week and yield curve inversion (short term yields higher than longer term yields) is beginning to show in parts of the U.S yield curve.  Historically, yield curve inversion has been a warning sign of weaker growth ahead or even a recession. U.S. interest rates falling and inverting is only part of the story that is taking place globally as interest rates continue to fall in all major economies attempting to cushion global economic weakness.
German 10-year yields moved below zero last week for the first time since 2016 and have remained below zero. Australia’s 10-year yield most recently fell to an all-time low of 1.772% and New Zealand’s 10-year bond yield hits its lowest level on record at nearly 1.87%. With global interest rates continuing to ratchet down, lower interest rates in theory will help cushion the U.S. and global economies. For today, at least, global equities are all higher and U.S. and global interest rates have hit a temporary bottom and are up on the session ignoring the weak U.S. housing starts data (see below).
  • U.S. Housing Starts for February fell by the most in the past eight months on a drop in single-family homes. Housing has been one of the weakest parts of the U.S. economy over the past year as the perfect storm of rising mortgage rates, higher lumber and land prices, and labor shortages have led to tight inventories and more expensive homes. While single family starts fell the most in four years, multifamily homes (apartment buildings and condominiums) jumped 17.8%. Three of four regions posted declines with the Northeast dropping an amazing 30%.
  • Correlating to the fall in housing starts, home prices, as measured by the Case-Shiller Home Price index, registered their smallest gains since late 2012 rising only by 0.1% month over month. Prices increased only by 3.6% YoY, down from 4.1% YoY from the previous month.
If we can help you with any Foreign Exchange needs, please email or call (800) 447‑4133.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Facebook Twitter LinkedIn Google Plus YouTube
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Unsubscribe from this list  |  Update email preferences
This message has been sent to Please do not reply to this email. To ensure the delivery of future emails, please add to your email address book or safe sender list.
Copyright ©2019 City National Bank – All Rights Reserved.
350 South Grand Avenue, 12th Floor, Los Angeles, CA 90071
City National Bank is a subsidiary of Royal Bank of Canada.
Equal Housing Lender
NMLSR ID# 536994 | City National Bank Member FDIC


Popular posts from this blog

Acquisitions or Alliances: What's Your Growth Strategy?