Stocks drop as falling U.S. yields, trade worries hit mood

Scott Olson  Getty

On Monday, the difference between the two-year and 10-year Treasury yields dropped to just 0.15 percent, its lowest level since prior to the last USA recession. Economist Will Denyer of Gavekal Research notes that the yield curve has flattened, and eventually inverted, before every US recession since the mid-1950s (see chart below).

Stuart Canning, research analyst at M&G Investments, has said the temporary yield curve inversion which saw three-year Treasury yields lower than two-year notes is a signal that interest rates in the USA may need to come down in the near-term. No surprise, then, that one investor calls an inverted yield curve a "harbinger of doom".

The 3-month to 10-year spread is now 0.492 percentage points.

There was added confusion over when the 90-day truce period, during which the US and China would hold off on imposing more tariffs, would start.

What is a yield curve?

Here's what that does: Yields on short-term bonds rise above those of longer-term bonds, historically a signal that an economic slowdown is around the corner.

Another big recession indicator is the recent weakness in housing.

In separate remarks on early December 3, Fed vice chair Randal Quarles said the central bank, while "data dependent", was following a strategy that would not be thrown off course by "every wavering" of economic statistics.

Gundlach said the Fed will need to be especially careful in its choice of words when they meet this month to deliver on their promised rate hike. "We are following a strategy and taking account of data over time as it comes in and in response to significant changes in direction". Wall Street's financial shares, which are particularly sensitive to bond market swings, dropped 4.4 per cent. S&P e-mini futures were down 0.3 per cent in Asian trade today.

The latest Game of Throne trailer teases the series' final season
Renfro wonders if the two converging is representative of what happens when a wight-dragon fights a regular dragon. Cersei Lannister, however, was still safe in the south of Westeros with Jaime deserting her and riding up north.

Joe Jonas ''Overwhelmed With Emotion'' at Nick & Priyanka's Wedding
However, the magazine has now removed the piece and apologised for the same on their official website. The website, a part of NY magazine, deleted the article the next morning with an apology.

Huawei to Release New Bezel-less Smartphone with In-Screen Camera
Samsung just recently announced the launch date of its first Infinity-O toting Galaxy A8s yesterday on Chinese social media. Huawei has confirmed that the device is called the Nova 4 on Weibo and it is expected to launch on 17 December 2018.

Even as the announcement of a "truce" in U.S.

MSCI's gauge of stocks across the globe shed 2.16 percent, its worst performance since October 11.

The dollar fell broadly on Tuesday as U.S. Treasury yields slipped, feeding fears that the Federal Reserve could pause in its rate-hike cycle, while an inversion in part of the yield curve was taken as a red flag for a potential recession.

Benchmark Treasury 10-year yield fell to its lowest point since mid-September.

Markets are also bracing for more news on the Brexit front.

While interest rate hikes have sent short-dated yields higher, tepid inflation and slowing economic growth expectations have kept longer-dated yields pinned down. As the spread between two- year and 10-year securities neared zero, the gaps between some other yields, including the two year and three year, were already upside down.

The outlook for USA growth, by contrast, he said remained strong.

Last year's massive federal tax cut has bolstered business confidence, but trade tension between Washington and major US trade partners looms as a possible economic drag, analysts said.

Related News:



Most liked

Meghan has private meeting with Michelle Obama in London
Six months after their engagement interview, Harry and Meghan married at St George's Chapel. However, the chat went down badly with one friend saying that Harry "went mental".

Imagery shows North Korean ballistic missile base expansion
USA officials did not immediately comment on the open-source findings by researchers. A headquarters area is positioned at the mouth of the valley, the images show.

London share prices PLUMMET amid US-China trade war fears — FTSE latest
China's ambassador to the United States brushed off questions about the different accounts of the Trump-Xi meeting. Officials in Beijing declined to comment on Trump's auto tweet and haven't confirmed such an agreement.

How to Watch the Game Awards
It was slightly unexpected, due to the fact that Red Dead Redemption 2 has beaten it in several categories throughout the night. But what could we be doing after or before the show? The Game Awards 2018 kicks off at 5:30 pm Pacific / 8:30 pm Eastern.

Oscars 2019: Kevin Hart quits as host amid tweets row
Even though Hart is now deleting the offending tweets, one imagines he hasn't had a change of, ahem, heart about them. This leaves the award show without a host for the time being, although the search for a replacement is surely on.

First Baby Born After Uterus Transplant From Dead Donor
Some who were born without a uterus, other had unexplained malformations, of sustained damaged during childbirth or infection. The transplanted uterus was removed during the C-section, allowing the woman to stop taking the immunosuppressive drugs.

Ubisoft teases something Fallout-esque for Far Cry
According to the teaser trailer, the next Far Cry will be available to play on PlayStation 4, PlayStation 4 Pro, Xbox One and PC. As for the teaser trailer below opens with a picturesque farm and a voiceover saying "none of us were ready for the end".

France Abandons Fuel Tax Increase After Weeks of Protest
Demonstrators were back in the streets wearing their signature yellow vests despite the announcement. He has refrained from speaking publicly about the protests and has largely remained in his palace.

Infant ibuprofen recall from Wal-Mart, CVS, Family Dollar
Contact your healthcare provider if your baby has experienced any problems that may be related to using this product. NSAIDS temporarily reduce the amount prostaglandins - a type of lipid - your body makes when you have an injury.

Bulandshahr violence: Yogi meets inspector Subodh Singhs family, assures justice
Asked why then Yogesh Raj's name had cropped up in the violence, he said, "It is because the two incidents have been linked". The first is the attack by a mob on police personnel which resulted in two deaths -that of a police officer and a civilian.

Ex-Fox News anchor to be new USA ambassador to the UN
If Nauert is confirmed by the Senate, she would be a leading administration voice on Trump's foreign policy. Haley announced in October that she would be resigning as the ambassador to the United Nations.

United States dad makes daughter walk 8km to school for bullying on bus
Kirsten Cox, 10, of Swanton, Ohio, was made to walk to school by her father after she was suspended for bullying . Cox posted video of the punishment - and was swiftly met with the typical online cacophony of applause and boos.

William and Kate to make Christmas visit to troops
The mom of three paused in the celebrations to give a speech about the difficulties of having a service member in the family. The couple said they had handed over a present of a bottle of aftershave for William and Kate to take over to Cyprus.

Diogo Dalot: Manchester United hosting Fulham a 'big game' after winless run
The 3-5-2 gets United's more of attacking players in their best position. "I know maybe he was offside, but it was very hard ". I know him for a long time, when he came to Chelsea and in Italy, and he was very polite with me.

Trump asks OPEC not to cut production
Unless there is a bullish clarification from the Saudi oil minister later today, prices are likely to remain under pressure. Saudi Energy Minister Khalid al-Falih said earlier that OPEC needed Russian Federation to come on board with any cuts.