Stocks paused today as geopolitical risks rise in the Middle East and investors return to safer assets. Oil prices have been on the rise after Iran shot down a U.S. drone. President Trump ordered and then called off an airstrike on Iran, saying he is “in no hurry” to confront Iran and that a strike would not have been proportionate to shooting down an unmanned drone.” Now, investors look to the G-20 summit for the next big indicator on trade and global markets.
Bond prices are relatively flat, and the 10-Year Treasury is yielding 2.06% after falling below 2%. This year, investors have dealt with a slowdown in the global economy, combined with risk related to U.S. tariffs that could worsen the economic cooling. Today, European factory output data pointed to a decline in activity in the region’s manufacturing sectors and the entire German yield curve is at risk of going negative. As of now, the Central banks seem to be keeping the markets afloat. The Fed said it will take necessary action, interest rate cuts, if need. For now, they are watching to see how everything plays out.