haven government debt set record lows Friday after a weak US jobs report added to growing fears of a global slowdown, sending investors scurrying for safety. The data added to worries that the US economy cannot escape the effect of weakness in Europe, where Spain is struggling to support its banking system, and a slowdown in China. Major US and European stock indexes fell more than 1.5 percent after US job growth in May was the weakest in a year and growth figures for the prior two months were revised lower, suggesting a faltering US economic recovery. Crude oil prices fell to a 16-month low below $98 per barrel as the weak US jobs report added to heightened concerns about the global economy following poor manufacturing data from China and dismal European reports on factory activity. Copper sank to its lowest level this year on global growth concerns, and market measures of investor anxiety spiked. The CBOE Volatility index jumped more than 5 percent and the Euro STOXX 50 volatility index rose 3.1 percent, paring earlier gains of more than 7 percent. German Bund futures hit a record high of 146.89, up 86 ticks on the day, and yields on German 10-year bonds fell as low as 1.127 percent. Benchmark 10-year Treasury notes rose as much as 1-4/32 in price to yield 1.442 percent, the lowest on records that date to the early 1800s, according to Reuters data.Yields on British gilts also hit record lows. “The hope for US investors had been that the US economy at least could continue its growth even as Europe was declining,” said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey. “The time has probably come to for some new government action in the US, Europe and China.” Some questioned the wisdom of buying government debt that on an inflation-adjusted basis already is providing negative returns. The coupon on German and US 10-year government debt is 1.75 percent - below the rate of inflation. “It's starting to get a little ridiculous. The bond market is just insane, insane. People have lost their mind,” said Stephen Massocca, managing director at Wedbush Morgan in San Francisco. – Reuters Stock markets around the world slumped. MSCI's all-country world equity index fell 1.7 percent. The FTSEurofirst 300 index index of top European fell more than 2 percent and hovered just above 950 points, wiping out this year's gains. The Dow Jones industrial average was down 201.05 points, or 1.62 percent, at 12,192.40. The Standard & Poor's 500 Index was down 23.77 points, or 1.81 percent, at 1,286.56. The Nasdaq Composite Index was down 56.50 points, or 2.00 percent, at 2,770.84. The euro erased early losses against the US dollar, rebounding from weakness sparked by the surprisingly weak US jobs report. The euro was up 0.2 percent at $1.2380. Brent crude oil futures tumbled to their lowest since February 2011 to an intra-day low of $97.70, before recovering to around $98.93, off 2.9 percent for the session. US crude oil slipped to $83.56 per barrel, down 3.4 percent. Gold prices reversed early losses to rally more than 2 percent, on fresh speculation US authorities could unveil another round of monetary easing to boost growth. Spot gold hit a high of $1,617.11 an ounce. The data was “very poor and confirmed the midcycle slowdown in the United States,” Saxo Bank Vice President Ole Hansen said. “Whether it will be enough to change the mind of the Fed toward additional QE remains to be seen. At least the gold market believes it could happen.” The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, fell 1.4 percent after tumbling nearly 11 percent in May, the second-largest monthly decline since the darkest days of 2008.
