Overseas Recession Woe Heats Up as Economic Data Plunges

The economic data issued by the United States last week all pointed to signs of cooling economy. And the employment data, which had been strong previously, also weakened more than expected. Hence, market concerns about the Fed's interest rate hike in May have eased, and the US dollar index hovered at a low of 101. Due to the sharp drop in economic data and employment data, the 3-month US Treasury yield curve unexpectedly exceeded the 10-year counterpart by 153 basis points, the largest figure on record since January 1982.

During the week, the US dollar and copper prices weakened in tandem, and the gold-to-copper ratio rose amid growing concerns over the US economy. In the eurozone, Eurostat data shows that the overall slowdown in inflation exceeded expectations in March, but core inflation accelerated slightly. The European Central Bank's (ECB) voting committee broadly supports interest rate hikes, but there are odds on the extent of the rate hike.

It is necessary to continue to pay attention to relevant economic data in Europe. If the economic data cools down more than expected and the European Central Bank still raises interest rates aggressively, the euro zone may also enter an economic recession and thus put pressure on copper prices. In China, Macron’s visit to China has reset Sino-French and Sino-EU relations, and the macroeconomic environment has eased. Overseas countries have high expectations for China’s economic growth.