GLOBAL MARKETS-Wall Street slides with bond yields as recession worries flare


By Kevin Buckland

OTTAWA, Aug 4 (Reuters)Wall Street shares slipped on Thursday whereas Treasury yields eased with oil as recession worries intensified amongst traders following the Bank of England’s warning of a drawn-out downturn, which nudged sterling to a one-week low.

The S&P 500 .SPX misplaced 0.42% to 4,137 as of 14:43 GMT, following its shut at a two-month excessive within the earlier session. The Dow .DJI dropped 0.42% to 32,676, and the Nasdaq .NDX fell 0.49% to 13,188, retreating from a three-month peak.

The two-year Treasury yield US2YR=RR eased 5.9 foundation factors to three.0488%, whereas the 10-year yield US10YR=RR slipped 7.2 foundation factors to 2.6756%.

The hole between them went as broad as detrimental 39.2 foundation factors, renewing a 2000 low. An inverted curve is usually considered as portending a recession.

The month-to-month U.S. non-farm payrolls report might be carefully watched on Friday, after information early Thursday confirmed a tick up in jobless claims.

“Expectations that we’re headed for a recession are clear, and the clearest signal is coming from the Treasury market,” stated Edward Moya, senior market analyst at OANDA in New York.

“Things are looking worse abroad, and there’s an expectation that we’re going to see more economic weakness going into year-end, and it’s hard to be optimistic on equities.”

The Bank of England delivered a much bigger, half-point fee rise earlier within the day, becoming a member of the Federal Reserve and different central banks in an accelerated race to catch inflation. But the hike was broadly anticipated, and traders have been extra centered on the central financial institution’s warning {that a} prolonged recession is on the way in which.

Sterling GBP=D3 sank 0.27% to $1.2115, after earlier dipping to $1.2065 for the primary time since July 29. The euro added 0.5% to 0.84135 towards the British pound EURGBP=D3, and rose as excessive as 0.8429 at one level for the primary time since July 26.

British gilt yields GB10YT=RR fell sharply, with euro zone bond yields extending their fall after the BoE assertion.

European shares have been steadier although, helped by sturdy earnings.

The STOXX .STOXX index of main European firms eked out a 0.13% acquire, whereas the FTSE .FTSE was about flat.

“The main surprise seems to be the somewhat downbeat economic forecasts that we have also been given,” stated Stuart Cole, head macro economist at Equiti Capital.

“That is somewhat worse than what we had seen in May, where the outlook was for one or two difficult quarters of low or negative growth, and then a recovery.”

The buck was principally weaker towards different friends amid decrease U.S. yields, with the greenback index =USD – which measures the currency towards six main counterparts together with sterling, the euro and the yen – slipping 0.27% to 106.18.

The greenback dropped 0.33% to 133.405 yen JPY=EBS, with the currency pair notably delicate to long-term Treasury yields.

Crude oil resumed declines, as merchants weighed the worsening financial outlook towards tight provide. O/R

Brent crude LCOc1 futures have been down 79 cents, or 0.8%, to $95.99 a barrel, whereas West Texas Intermediate (WTI) crude CLc1 futures fell 43 cents, a 0.4% decline, at $90.23.

Spot gold XAU= jumped 1.22% to $1,786 an oz., helped by decrease U.S. yields and a weaker greenback.

World FX charges YTD

Global asset efficiency

Asian stock markets

Central Bank Policy Rates

(Reporting by Kevin Buckland; Additional reporting by Huw Jones; Editing by Kim Coghill, Mark Potter and Susan Fenton)

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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.

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