Wednesday March 27th

27-03-2019

Stock futures fall along with Treasury yields as recession fears persist

U.S. stock index futures fell on Wednesday, tracking Treasury yields, as worries over the economy lingered. At around 7 a.m. ET, Dow Jones Industrial Average futures indicated a decline 86 points at the open. Futures on the S&P 500 and Nasdaq Composite also fell. The benchmark 10-year Treasury yield traded at 2.37 percent and hit its lowest level since late 2017. Investors are keeping an eye on rates after the 10-year fell below the 3-month rate last week for the first time since 2007. It is a development that investors call an inverted yield curve and is seen as an early indicator of a recession. The U.S. Treasury yield curve has inverted before each recession in the past 50 years and has only offered a false signal just once in that time, according to data from Reuters. Yields fell on Wednesday after Stephen Moore, who is expected to be nominated to the Federal Reserve Board of Governors, called for the central bank to cut rates by half a percentage point. Moore made his remarks in an interview with The New York Times, noting he is not a "dove" or a "sycophant" for President Donald Trump. Investors have been piling into Treasurys amid the release of weaker-than-expected economic data. The disappointing data have stoked fears that economic growth may be slowing down. The U.S. trade deficit sank 15% in January to a five-month low, largely reflecting cheaper oil, a surge in soybean exports and lower imports from China due to disruptions cause by a festering dispute with the Trump administration. The deficit tumbled to $51.1 billion from a revised $59.9 billion in December, according to a government report that was delayed by the partial federal shutdown early in the year. Economists polled by MarketWatch had forecast a $57.7 billion gap. Wall Street's main indexes registered solid gains in the previous session, but finished below their session highs in a reflection of the underlying concerns about the economic outlook. Stocks in Asia were mixed on Wednesday as investor concerns over the outlook for the global economy lingered. The Nikkei 225 in Japan declined 0.23 percent to finish at 21,378.73. The Topix index also fell 0.52 percent to close at 1,609.49. In South Korea, the Kospi slipped 0.15 percent to close at 2,145.62. The mainland Chinese markets saw gains on the day, with the Shanghai composite adding 0.85 percent to close at 3,022.72 and the Shenzhen component rose 1.01 percent to finish its trading day at 9,609.44. The Shenzhen composite gained 0.899 percent to close at 1,654.69. Hong Kong's Hang Seng index added about 0.6 percent in its final hour of trading. Oil prices were mixed on Wednesday, with Brent extending the previous session's rise, but gains were kept in check amid growing fears over the impact of a global economic slowdown on demand. Brent added 16 cents, or 0.2 percent, to $68.13 by 0706 GMT, reversing earlier losses, and was not far off its year-to-date high of $68.69 reached last week. U.S. crude futures were down 3 cents at $59.91 after spending much of the session in positive territory. The U.S. benchmark rose 1.9 percent in the previous session. Gold prices inched up on Wednesday as a lackluster stock market and falling bond yields reflected worries about a global economic slowdown and lifted safe-haven assets. Spot gold was up 0.2 percent at $1,318.26 per ounce after falling 0.5 percent on Tuesday. U.S. gold futures rose 0.2 percent to $1,318 an ounce.