30-year Treasury yield falls below 2% for first time ever

The US-China trade war has hammered global demand

The US-China trade war has hammered global demand

Tech stocks and banks led the broad sell-off. The retailer also cut back its profit outlook for the full year by 20 cents.

Europe's largest economy, Germany, shrunk by 0.1% in the second quarter, indicating that the US-China trade conflict and a weakening global economy have started to take their toll on the export-reliant country.

Although some were quick to point out that an inverted yield curve doesn't necessarily cause a downturn itself, turmoil in the bond market can wind up becoming a self-fulfilling prophecy.

EURUSD slipped from 1.1200 to 1.1150 over the previous two days, while the stock markets have experienced a rather bumpy road.

The Dow Jones Industrial Average fell 800 points, or 3%, to 25,479. The Nasdaq lost 242 points, or 3%, 7,773. The Reserve Bank of Australia's No. 2 official weighed in on the debate on Thursday questioning the value of using the inversion as a sign of recession.

President Trump said Tuesday that he was delaying tariffs on certain consumer goods - such as electronics, toys and sneakers - so that USA consumers would not be hurt by higher prices during the holiday shopping season. China's jobless rate recently hit an all-time high, not helped by the US-Sino trade war, and protests in Hong Kong continue, which are disrupting economic activity there. -China trade war will spread, after the inversion of a key part of the yield curve this week raised fears of a US recession. As interest in a bond goes up, its price goes up, and its yield goes down.

In short, it's a sign of economic pessimism.

This historic drop in the long term USA bond yield comes shortly after the interest rates on 10-year and 2-year Treasuries inverted.

The yield on the 10-year Treasury briefly dropped below the two-year yield Wednesday, an ominous signal that has predicted past recessions.

"Historically, it's 14 to 22 months out". The indicator isn't flawless, though, and has given false signals in the past.

Instead, the two-year yield is now higher than the ten-year yield. Thirty-year Treasury bond yields fell to a record low of 1.916% on Thursday.

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Mark Haefele, chief investment officer at UBS Global Wealth Management, said how long the curve remained inverted, and to what extent, was crucial. Raised too much & too fast.

With bond yields falling, banks took heavy losses Wednesday.

Interest rate-sensitive banks tumbled 4.3 percentage points.

On the other hand, the currency market avoids sharp dynamics.

Rival department store operators Nordstrom Inc and Kohls Corp slid 10.6 percent and 11.0 percent, respectively.

These concerns have sent oil prices plunging with Brent crude losing another 0.5% to $59.16 a barrel, after shedding 3% overnight. National Oilwell Varco slumped 8 percent and Schlumberger skidded 6.6 percent.

Global benchmark Brent crude LCOc1 fell $1.50 to $57.98 a barrel. It dipped on Wednesday by 0.2% to $1,512 per ounce but stayed near its recent $1,534 high. Natural gas fell 1 cent to $2.14 per 1,000 cubic feet. Although it is also great for bond investors. The euro edged up to $1.1142 from $1.1138.

Overseas, Germany's DAX dropped 2.3 percent following the weak German economic data.

The S&P 500 closed down 2.9%, which for the stats heads out there was a three standard deviation move, on volumes 35% above the 30-day average, and that is a red flag.

In Asia, indexes in China and Hong Kong were mostly in positive territory, with the benchmark Shanghai Composite and Hang Seng both posting modest gains.

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