Markets listen to their inner fears

<p>Kia ora,</p><p>Welcome to Friday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news equity markets are now listening to the 'fear' signals the bond markets have been sending recently.</p><p>Overnight, there has been wild swings in markets. The bond squeeze deepened and spread to shorter-term US Treasuries, there has been a sharp sell-off in equities, and there is a continuing and sharp rise in the USD. A risk-off sentiment grips investors.</p><p>Not helping in the US, was that the expected improvement in the <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20211289.pdf" target="_blank"><strong>jobless claim levels</strong></a> last week didn't eventuate. There are still 3.2 mln people on these benefits and still far above the pre-pandemic levels of below 2 mln.</p><p>And investors are looking ahead and <a href="https://www.marketwatch.com/story/why-is-the-stock-market-down-falling-bond-yields-point-to-growth-scare-11625768441" target="_blank"><strong>seem to be worried</strong></a> that the Q2-2021 growth spurt might be it for the other side of the V bounce back - and that the trajectory after that won't be so bullish.</p><p>This comes as current data about consumer appetites for new personal debt is rising in the US. Demand for car loans, credit cards and personal loans were up +11% compared to the equivalent 2019 levels according to one credit score reporting service.</p><p>And the Fed's own <a href="https://www.federalreserve.gov/releases/g19/HIST/cc_hist_sa_levels.html" target="_blank"><strong>consumer credit data for May</strong></a> reveals its own continuing strong rise, jumping sharply by a +10% pa rate and marking the fifth consecutive month of solid rises exceeding +5%.</p><p>In Europe, the ECB changed little in their usual <a href="https://www.ecb.europa.eu/home/search/review/html/ecb.strategyreview_monpol_strategy_statement.e