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https://www.marketwatch.com/story/2...ng-bond-market-recession-indicator-2019-08-14


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U.S. Treasury yields fall sharply, 2-year/10-year yield curve inverts, triggering recession indicator



Published: Aug 14, 2019 3:24 p.m. ET











U.S. Treasury 10-year note yield briefly fell before the 2-year note yield


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MW-FY635_sonnyo_NS_20171117174701.png

By
SunnyOh



U.S. Treasury yields fell sharply on Wednesday after a raft of weak economic data from China and Germany underlined a slowdown in global growth, offsetting hopes that U.S.-China trade talks were making progress.

The sharp rally in long-term government bonds briefly inverted a key measure of the yield curve’s slope for the first time since June 2007.
How are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -1.28% plunged 8.2 basis points to 1.596%, its lowest since September 2016.

The 2-year note rate TMUBMUSD02Y, -1.81% retreated 7.5 basis points to 1.592%, while the 30-year bond yield TMUBMUSD30Y, -0.42% tumbled 9.3 basis points to 2.038%, an all-time closing low.

The spread between the 2-year note and the 10-year note temporarily fell to a negative 1 basis point. An inversion of this measure has often preceded an economic downturn. Investors say its powers as a recession indicator comes from its ability to reflect when tight monetary policy is capping growth and inflationary pressures.

See: The U.S. Treasury 2-10 year yield curve inverted and that means stocks are on ‘borrowed time,’ says BAML

What’s driving Treasurys?

The slowdown in China’s economy was highlighted by a rise in industrial production at its slowest pace since Jan. 2002, increasing 4.8% in July from a year earlier versus a 6.3% increase in June. Germany’s economy shrank 0.1% in the second quarter of 2019 as the U.S - China trade war hit global manufacturing supply lines and the country’s export-dependent industries.

See: What Germany’s dismal GDP number really means for Europe and interest rates

The raft of anemic data and the inversion of the U.S. yield curve weighed on investor sentiment, stirring demand for safe haven assets like Treasurys.

U.S. stocks saw a sharp selloff on Wednesday, with the S&P 500 SPX, +0.34% and the Dow Jones Industrial Average DJIA, +0.27% on track to end lower by more than 2%.

The surge of economic pessimism comes only a day after the U.S. Trade Representative announced it would winnow down the list of goods that are set to incur a 10% tariff on additional $300 billion of Chinese imports, measures which were publicized earlier in August 1.

Read: Fed not on red-alert after yield-curve inversion
What did market participants’ say?

“When I look at the data from today, there’s nothing that justifies the [flight to safety] we are having. Perhaps it’s the cumulative effect of a lot of issues the market has been grappling with. We keep piling on more issues. There’s only so much markets can bear,” said Gautam Khanna, senior portfolio manager at Insight Investment.

“At the moment, investors think bonds are the safest way to protect their portfolio. And some think there’s another shoe to drop and a bigger correction in equities must be waiting around the corner,” Robert Robis, chief fixed income strategist at BCA Research, told MarketWatch.
What else is on investors’ radar?

In the U.K., the spread between the 2-year yield TMBMKGB-02Y, +3.00% and the 10-year yield TMBMKGB-10Y, -3.04% for British government debt, or gilts, also inverted alongside the U.S. Treasurys market.

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Sunny Oh



Sunny Oh is a MarketWatch fixed-income reporter based in New York.



https://www.cnbc.com/2019/08/15/bond-yields-are-tumbling-throughout-asia-pacific.html


Bond yields are tumbling throughout Asia Pacific
Published Wed, Aug 14 2019 11:39 PM EDTUpdated Thu, Aug 15 2019 2:57 AM EDT

Weizhen Tan@weizent





Key Points
  • In Japan, Australia, South Korea, Hong Kong and Singapore, yields on 10-year government bonds have been dropping sharply.
  • Recession fears have sent investors pouring into the assets.
  • But investors are staying away from riskier markets — the high-yielding Asia bond markets such as India and Indonesia.
  • The yield on the benchmark 10-year Treasury note broke below the 2-year rate early Wednesday.
104717029-GettyImages-840736748.jpg

Pedestrians are reflected on a window of a securities company in Tokyo on Aug. 30, 2017.
Toshifumi Kitamura | AFP | Getty Images
Yields for 10-year government bonds in major Asian markets have been dropping sharply as recession fears send investors pouring into the assets.
Bond prices move opposite yields, and as investors rush to buy them, prices surge and yields fall in tandem.

Here’s a look at how each market’s 10-year government bond yield has fallen by Thursday morning, versus a week ago and the beginning of the month.
Asia bond yields 5.1565848152484.png

In Japan, the 10-year yield dropped below the Bank of Japan’s preferred range for the first time last week — falling past -0.2%. Previously, the central bank has fixed the yield on the 10-year bond at around zero, which it pegged at a range of between 0.2% and -0.2%.
Recession fears have roiled markets. The yield on the benchmark 10-year Treasury note broke below the 2-year rate early Wednesday. That so-called yield curve is a bond market phenomenon that’s been a reliable, albeit early, indicator for economic recessions.
The yield on the U.S. 30-year bond also fell to a new low.

While lower-yielding markets, such as Hong Kong, South Korea and Singapore, and mid-yielding markets such as Malaysia and China, have seen rates drifting lower, one analyst told CNBC that investors are staying away from riskier markets — the high-yielding Asia bond markets such as India and Indonesia.
That’s causing the yields of those bonds to go up, said Julio Callegari, a fixed income portfolio manager at J.P. Morgan Asset Management.
“The main reason is that these bond markets are more sensitive to risk aversion — that usually causes depreciation in their currencies and pressure on the yield curve,” he said in an email. “Overall we expect this trend to continue for a while, since broadly speaking economic growth is still slowing in the region and central banks are likely to keep easing monetary policy.”
In the U.S., investors have also been rushing into bonds. The iShares 20+ Year Treasury Bond ETF, TLT jumped 2.1% on Monday, its biggest gain in a year.
Commenting on the recent main yield curve inversion in the U.S., former Federal Reserve Chair Janet Yellen said Wednesday that “it may be a less good signal ” this time around.
“The reason for that is there are a number of factors other than market expectations about the future path of interest rates that are pushing down long-term yields,” Yellen said on Fox Business Network.
— CNBC’s Eustance Huang, Thomas Franck and Patti Domm contributed to this report.




https://www.cnbc.com/2019/08/15/us-...falls-below-2percent-for-first-time-ever.html

30-year Treasury yield falls below 2% for the first time ever
Published Thu, Aug 15 2019 2:38 AM EDTUpdated 18 min ago

Maggie Fitzgerald@mkmfitzgerald

Sam Meredith @smeredith19





Key Points
  • Around 9:15 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was at 1.589%, while the yield on the 30-year Treasury bond was at 2.031%, after earlier falling to 1.941% for the first time ever. The 2-year Treasury yield was 1.575%.
  • The historic drop in long-term U.S. bond yields comes shortly after interest rates on the closely watched 10-year and 2-year Treasurys inverted.
  • At times of market turbulence, investors tend to flee to assets expected to either retain or increase in value — such as gold, the Japanese yen and government bonds.
Investors clamored into the safety of U.S. government bonds, sending the 30-year Treasury bond yield below 2% for the first time ever.
Around 9:15 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was at 1.589%, while the yield on the 30-year Treasury bond was at 2.031%, after earlier falling to 1.941% for the first time ever. The 2-year Treasury yield was 1.575%.

US30Y_chart.1565866719629.jpeg

The historic drop in long-term U.S. bond yields comes shortly after interest rates on the closely watched 10-year and 2-year Treasurys inverted. The inversion of this key part of the yield curve has previously been a reliable indicator of economic recessions.
“The yield curve inverted which created a temporary ‘pile on’ effect in the bond markets,” wrote Tom Essaye of The Sevens Report. “We have absolutely not seen what we wanted to out of the Fed. We had hoped for a rally in the 10-year yield and a widening of the 10s-2s spread. The exact opposite has occurred, and at this point currency and bond markets are no longer flashing ‘caution’ signs on the U.S.-global economy and risk assets, they are flashing a ‘warning’ sign —loudly.”
That part of the curve was positively sloping again on Thursday but only slightly.
“The 30-year yield in itself is historic given that it is moving to massive lows but the curve inversion is typically the signal, one of the better signals you can get that there is increased risk of recession,” said Bank of America technical strategist Stephen Suttmeier.

U.S. Markets Overview: Treasurys chart
TICKER COMPANY YIELD CHANGE %CHANGE US 3-MOU.S. 3 Month Treasury1.918-0.0410.00US 1-YRU.S. 1 Year Treasury1.761-0.0240.00US 2-YRU.S. 2 Year Treasury1.548-0.0290.00US 5-YRU.S. 5 Year Treasury1.468-0.020.00US 10-YRU.S. 10 Year Treasury1.567-0.0140.00US 30-YRU.S. 30 Year Treasury2.012-0.0150.00
The stock market took a huge hit in the previous session, with the Dow plunging 800 points in its worst decline of the year and fourth-largest point drop ever to a two-month low. The sell-off exacerbated an extensive flight-to-safety into government securities.
However, markets rose on Friday after Hua Chunying, a spokesperson at China’s Ministry of Foreign Affairs, said China “hopes the U.S. will meet China halfway and implement the consensus reached by the two leaders during their meeting in Osaka.” This trade headline took pressure off bonds as the 10-year yield rose above the 2-year yield.
This is after China said Thursday it has to take necessary countermeasures to the latest U.S. tariffs on $300 billion of Chinese goods. The ministry also said the U.S. tariffs violate a consensus reached by leaders of two countries and get off the right track of resolving disputes via negotiation.
At times of market turbulence, investors tend to flee to assets expected to either retain or increase in value — such as gold, the Japanese yen and government bonds. These safe-haven assets are typically sought to limit one’s exposure to losses in the event of a sharp market downturn.
Following a yield curve inversion, its common that markets would top out before they start to enter a period of downturn months later. Suttmeier said the seasonality matches the cyclical data in this case.
“The seasonality and the inversion signals are aligned here. Meaning that, you get a dip after inversion into October, November and then a rally, we could be set up for a rally based on the inversion signals from November into January,” he said.
Recession fears
It comes at a time when market participants are worried about a protracted U.S.-China trade war, geopolitical tensions and uncertainty over Brexit. Economic data in China and Germany this week also suggested a faltering global economy.
However, strong economic data helped lift stocks. Retail sales rose solidly in July and beat expectations, which is a sign of consumer optimism. The U.S. productivity also grew a healthy 2.3% rate in the second quarter.
The number of Americans filing applications for unemployment benefits increased more than expected last week, but the trend continued to point to a strong labor market.
Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 220,000 for the week ended Aug. 10, the Labor Department said on Thursday.
The U.S. Treasury is set to auction $55 billion in 4-week bills and $40 billion in 8-week bills on Thursday.



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Date/Time: 11-06-2018 Close 3.214 Open3.201High3.224Low3.189Volume0








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https://www.cnbc.com/2019/08/14/us-...rd-low-threatens-to-break-below-2percent.html

MarketsUS 30-year bond yield falls to record low, threatens to break below 2%
Published Wed, Aug 14 2019 8:03 AM EDTUpdated Wed, Aug 14 2019 10:10 AM EDT

Thomas Franck@tomwfranck





Key Points
  • A global hunt for safer assets has driven the 30-year Treasury bond to a record low.
  • Long-term yields have plunged this month amid worries about U.S.-China trade developments and GDP growth.
  • It’s in part a response to bond yields rates around the world that have gone negative.
V0Hvo-30-year-bond-yield.1565786380300.png

The yield on the benchmark 30-year Treasury bond plunged to a record low on Wednesday as a global hunt for safer assets threatened to send the rate below 2% for the first time in history.

Shortly before 8 a.m. ET, the yield on the U.S. 30-year bond traded at 2.015%, well below its prior all-time low of 2.0889% hit in the days following Britain’s June 2016 referendum to leave the European Union.
“That this happened with no negative bombshells overnight is significant because a move like this (that is not event-driven), is rooted in something much more secular and durable like a darkening global economic outlook and an ability to look at the forest past the trees when it comes to where inflation is heading down the road,” Gluskin Sheff’s chief strategist David Rosenberg wrote in a note.
Bond market anomalies were the focus of Wall Street on Wednesday. Along with the record low in the 30-year yield, plunging long-term rates caused the 10-year yield to fall below the 2-year rate, a reliable recession indicator.
Long-term yields have swooned this month as worries about U.S.-China trade developments and GDP growth — coupled with expectations for lackluster inflation and more aggressive central bank action — have sent traders in search of safer investments.
“It’s a very unusual time period,” said Arthur Bass, managing director of fixed income financing, futures, and rates at Wedbush Securities, noting that U.S.-China trade war as well as negative yields in Europe and Japan have created a set of rare headwinds.


https://www.cnbc.com/2019/08/12/us-bonds-treasury-yields-tick-lower-amid-trade-war-concerns.html


Bonds10-year Treasury yield dips back below 1.7% amid global growth worries
Published Mon, Aug 12 2019 2:46 AM EDTUpdated Mon, Aug 12 2019 3:25 PM EDT

Sam Meredith @smeredith19





U.S. government debt yields were sharply lower on Monday, amid trade tensions between the world’s two largest economies and concerns of slowing global economic growth.
U.S. Markets Overview: Treasurys chart
TICKER COMPANY YIELD CHANGE %CHANGE US 1-YRU.S. 1 Year Treasury1.761-0.0240.00
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 1.63%, while the yield on the 30-year Treasury bond was also lower at around 2.127%.

The spread between 2-year and 10-year Treasury yields narrowed to about only 5 basis points on Monday, near its lowest level since 2007.
“Persistently low inflation in developed economies should constrain nominal yields, and tariffs are more likely to weigh on prices via demand destruction,” Michael Reynolds, investment strategy officer at Glenmede Trust Company. “Overall, these factors are holding back aggregate demand for both consumer spending and business investment, culminating in lower bond yields that reflect diminished growth expectations.”
Market focus is largely attuned to simmering trade tensions between Washington and Beijing.
On Friday, President Donald Trump said he was not ready to make a deal with China and called into question the next round of trade talks. It comes after the U.S. president said he would impose a 10% tariff on the remaining $300 billion worth of Chinese imports on September 1. China responded by halting its purchases of U.S. agricultural products.
Last week, the U.S. accused China of being a currency manipulator after Beijing allowed the yuan to dip below the 7-per-dollar level for the first time in more than a decade.

On Monday, the People’s Bank of China set its daily midpoint for yuan trading — which determines the limits for its onshore movement — at 7.0211 per dollar. That was weaker than Friday’s session, but stronger than market expectations.
Meanwhile, the U.S. Treasury is set to auction $42 billion in 13-week bills and $42 billion in 26-week bills.



https://www.bloomberg.com/news/arti...-drops-to-fresh-2019-low-nearing-record-level


U.S. Long-Bond Yield Nears All-Time Low as Global Anxiety Grows
By
Katherine Greifeld
and
Vivien Lou Chen

August 13, 2019, 2:53 AM GMT+8 Updated on August 13, 2019, 11:13 AM GMT+8

  • Flight to safety has pushed a key part of curve near inversion
  • Hong Kong, Argentina concerns added to existing trade war woes





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The rate on 30-year Treasury bonds approached an all-time low and a closely monitored section of the U.S. yield curve hurtled closer to inversion as investors sought shelter amid a fraught geopolitical backdrop.


The yield on the long bond tumbled as much as 14 basis points on Monday to close in on its record-low of 2.0882% from July 2016. The 10-year note fell 10 basis points to 1.65%, and at one point was just 5 basis points more than two-year notes. That’s the flattest that part of the curve has been since 2007.


“The general risk-off theme is driving the move, which is actually flattening the curve rather than steepening it,” said Gennadiy Goldberg, a senior U.S. rates strategist at TD Securities. “This suggests that the market is being driven less by Federal Reserve expectations and more by a flight to quality or global uncertainty.”


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The rush for cover came as global trade concerns rumbled on, with investors also bidding up haven assets including the Japanese yen and gold. The unexpected defeat of Argentine President Mauricio Macri in a primary vote sparked a selloff of the nation’s assets, and the Monday cancellation of flights in Hong Kong due to protests added to a broader sense of unease.


Asia wasn’t spared. Australia’s 10-year bond yield opened at a fresh all-time low on Tuesday, while Japan’s 30-year yield dropped to 0.2050%, the lowest since July 2016.

Fed funds futures showed traders betting on more easing from the U.S. central bank, with around 66 basis points of cuts priced in for the rest of this year.
“There’s a lot of concern that negative rates are going to move onto U.S. shores, and that’s driving demand for duration from fixed-income investors who are looking to insulate themselves,” said Mark Heppenstall, chief investment officer for Penn Mutual Asset Management, which has $27 billion under management.
Rapid Plunge
The rapid plunge in Treasury yields has also put the 10-year note’s record low in sight. After ending July at 2.01%, the yield on those benchmark securities has fallen almost 40 basis points in just eight trading days. They yielded almost twice as much in October.

The pace of the move means 1.318% -- the all-time low set three years ago -- is at risk of being broken this month or in September, according to Seaport Global’s Tom di Galoma. UBS also sees a new low ahead, slashing its year-end target to 1.25% from 2%.
The catalyst for the drop, di Galoma says, will be a continued fall in rates elsewhere in the world, along with a U.S. stock sell-off that prompts investors to scoop up even more Treasuries.
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“The plunge in global rates, especially in Europe, is having a profound effect on U.S. interest rates,” said di Galoma, the firm’s managing director of government trading and strategy. “At this point, we see most G-20 economies growing at a tepid pace and that worries us. We see U.S. 10-year rates collapsing toward 1%-1.25% if growth or inflation in the U.S. do not pick up soon.”
 

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So the US are manipulating their T Bond now. Nose dive all interest to below par so that China cannot cash out or lose money if dump bond notes.

Who is currency manipulator.... hoot ah complaint to IMF now...
 
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