Futures Drop, S&P Below 2,800, Bond Yields Crater As Traders Brace For Impact
Global equity market and US stock futures, which again are a sea of red as Sino-U.S. trade tensions continue to escalate - with a rare earth boycott by China now virtually assured - while fears of an Italy-EU confrontation are growing again, accelerating a global bond rally on Wednesday, as investors dumped shares and scurried for the safety of government debt, the dollar and gold.
When bonds rally the yield drops-yes they are worth moar in numerical terms however the overall rate of return drops.
See this
Bond bulls get a boost as trade tensions fan recession fears
LONDON (Reuters) - The global bond rally accelerated on Wednesday, sending 10-year U.S Treasury yields to 20-month lows, as investors fearful of the fallout from the Sino-U.S. trade war sold shares and scurried for the safety of German and U.S. government debt.
U.S. 10-year yields are down almost 30 basis points this month
See Cap#3
German yields slipped deeper into negative territory to the lowest in almost three years.
they have had negative yield for a long time when you factor in real inflation rates.
Wall Street was set to open lower, with S&P500 futures down 0.7%, still feeling the effect of U.S. President Donald Trump’s comment that he was “not yet ready” to make a deal with China over trade.
https://www.reuters.com/article/us-global-markets/bond-bulls-get-a-boost-as-trade-tensions-fan-recession-fears-idUSKCN1SZ02F
Asian stocks dropped, led by health care and consumer staples companies, after rising in the previous three trading days. Most markets in the region were down, with South Korea’s Kospi losing its year-to-date gain. The Topix gauge fell 0.9%, driven by Takeda Pharmaceutical and Sony. The Shanghai Composite Index edged higher, though, rising 0.2%, as large insurers rallied on a tax deduction.
Later in the session, declines in European miners and tech companies pulled the Stoxx Europe 600 Index lower, after Japanese and South Korean equities bore the brunt of losses in Asia. European shares opened lower, with Germany’s exporter-heavy index down 1% and a pan-European share benchmark losing 1.3%. Europe'
Europe's Stoxx 600 Banks Index falls as much as 1.7% on Wednesday, erasing all gains for the year 2019, to head for its worst month in three years.
In commodities, West Texas oil futures dropped, losing all of their gains from Tuesday and more, dipping below $59 a barrel in New York.
See cap #4
Gold recovered most of Tuesday’s losses as U.S.-China trade tensions climbed and global growth concerns escalated, as investors continue to seek haven assets.
Market Snapshot
S&P 500 futures down 0.5% to 2,790.25
STOXX Europe 600 down 1.2% to 371.30
MXAP down 0.7% to 152.67
MXAPJ down 0.7% to 497.36
Nikkei down 1.2% to 21,003.37
Topix down 0.9% to 1,536.41
Hang Seng Index down 0.6% to 27,235.71
Shanghai Composite up 0.2% to 2,914.70
Sensex down 0.4% to 39,606.99
Australia S&P/ASX 200 down 0.7% to
6,440.03
Kospi down 1.3% to 2,023.32
Brent futures down 2.2% to $68.60/bbl
German 10Y yield fell 0.2 bps to -0.163%
Euro down 0.02% to $1.1158
Italian 10Y yield rose 0.6 bps to 2.31%
Spanish 10Y yield fell 4.9 bps to 0.738%
Gold spot up 0.4% to $1,284.73
U.S. Dollar Index up 0.1% to 99.04
US Event Calendar-data
7am: MBA Mortgage Applications, prior 2.4%
10am: Richmond Fed Manufact. Index, est.
7, prior 3
In other news, the PBOC stepped up its efforts to bridge the funding gap in China’s financial system after the surprise seizure of Baoshang Bank Co. led to a jump in borrowing costs by injecting c. CNY 250bn into the financial system via open-market operations today.
This will continue-no way around it, also the yuan is being tarred and feathered as the PBOC keeps saying the anyone shorting it will "pay the price'.
So lots of moving parts at the moment.
https://www.bloomberg.com/markets/stocks/futures
https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
https://www.dailyfx.com/crude-oil