Forex Marketz Daily Forex News – Fully Markets Update
Asian markets tracked the sell off on Wall Street overnight as the Dow Jones Industrial Average shed over 800 points. For the first time in 12 years, the Treasury yield curve has inverted. This signals a recession is looming for the world’s largest economy, the United States.
Asian and global traders were already on edge as economic data out of China and the Eurozone pointed to slowing economic growth. The yield curve inversion has added fuel to the fire as traders flee at-risk asset classes for safe havens like the Japanese yen, Swiss franc and the yellow metal (gold).
In Japan, by lunchtime, the Nikkei 225 was down over 1.5 percent. The broader Topix index, in Tokyo, shed over 1.3 percent.
Elsewhere in the Asian and Pacific Rim, the Australian ASX 200 shed 2.61 percent despite economic data showing that that the jobless rate was unchanged. The labor report smashed expectations as more jobs were added to the economy, for the month of July, than was expected.
In China, on the mainland, the Shanghai composite was down 0.62 percent. The smaller Shenzhen composite lost more than three quarters of a percent and the Shenzhen component fell 0.73 percent.
In Hong Kong, the benchmark Hang Seng index was down a fraction of a percent.
Asian Traders Worry about the Treasury Yield Curve and Flee into Safe Havens
Traders worry when the Treasury yield curve inverts as that signals a recession. The ten year Treasury bond yield is at its lowest level in three years. The 30 year note is now below two percent, which is the floor for the Federal Reserves policy rate.
Trader sentiment was already bad before this after economic data rattled the markets. Data showed that the German and Chinese economies were under pressure from the ongoing trade war between the U.S. and China as economic activity has slowed.
The inverted yield curve and a possibility of a recession in the U.S. will continue to boost safe haven asset classes today including gold and other low-risk assets.
