Bloomberg on Economic Downturn Signal: "'Lehman Nightmare' Comes to Mind"

Stocks, Bonds, and Cryptocurrencies Plunge Across the Board

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[Asia Economy Reporter Hyunju Lee] On the 13th (local time), the U.S. financial market experienced a 'Black Monday' with simultaneous crashes in stocks, bonds, and cryptocurrencies, prompting reactions in the market reminiscent of the situation just before the bankruptcy of Lehman Brothers during the 2008 global financial crisis.

According to Bloomberg News, the Standard & Poor's (S&P) index, representing the New York Stock Exchange, closed the day down sharply by 3.88% at 3749.63, falling more than 21% from the January peak (4796.56), thus entering a bear market.

Among the S&P 500 stocks on that day, only five stocks, including Domino's Pizza and McDonald's, recorded gains.

The Dow Jones Industrial Average also dropped 876.05 points (2.79%), and MarketWatch reported that this marked the first time in history that the index fell more than 500 points for three consecutive trading days.

In the bond market, the 2-year U.S. Treasury yield, which is sensitive to U.S. monetary policy, rose by 0.3 percentage points during the day to 3.43%, the highest level since November 2007.

Notably, during the day, the 2-year Treasury yield surpassed the 10-year Treasury yield, causing a yield curve inversion interpreted as a recession signal. This inversion phenomenon occurred for the first time since April.

In the cryptocurrency market, the shock intensified as Celsius, a cryptocurrency financial institution, announced a suspension of withdrawals for deposited coins.

In the foreign exchange market, the preference for the safe-haven U.S. dollar strengthened, with the dollar index, a measure of the dollar's value, rising 0.6% to 105.04, reaching its highest level in about 19 years since December 2002.

Bloomberg stated that considering these indices, it was enough to recall the situation before the Lehman Brothers bankruptcy. Christian Hoffman, a portfolio manager at investment manager Sunberg, expressed concern, saying, "Market liquidity is worse than at the time leading to the Lehman Brothers bankruptcy," adding, "Liquidity shortages can cause additional risks."

This content was produced with the assistance of AI translation services.