➤ 10-year Treasury yields recover after inversion.
➤ Growth concerns cloud global stock markets.
➤ Sterling stays under Brexit pressure.
➤ Brent crude oil falls, gold gains.
Ten-year Treasury yields recovered but global stock markets remained under pressure after a closely watched portion of the U.S. yield curve inverted March 22, reigniting fears that the end of economic expansion in the U.S. may be on the horizon.
Yields on benchmark 10-year Treasurys fell below three-month yields last Friday; a move that has historically served as a prelude to a recession. Chicago Federal Reserve President Charles Evans acknowledged investors' nervousness around the yield curve inversion, but said the inversion was narrow and the U.S. economy was in good shape.
The spread between these bond yields returned to positive territory this morning as 10-year Treasury yields added 2 basis points to 2.465% while three-month yields lost 1 basis point to just under 2.45% as of 6:30 a.m. ET.
Meanwhile, benchmark German Bund yields recovered after falling below zero last Friday on weak manufacturing data from the country. In contrast, yields on 10-year Japanese government bonds dipped 1 basis point to negative 0.085%, while those on Australian bonds tumbled 5 basis points to 1.79%.
Concerns over slowing economic growth weighed on global stock markets, with most Asian and European indexes in the red March 25. Japan's Nikkei 225 index slumped 3.01%, while Hong Kong's Hang Seng index lost 2.03% and the Shanghai SE Composite closed 1.97% lower.
The Stoxx Europe 600 index dipped 0.21%, while the FTSE 100 was broadly flat and Germany's DAX index inched up 0.19%. Wall Street looks set to open lower on cue from global stock markets, with S&P 500 futures down 0.09%.
The dollar index erased earlier gains to drop 0.07% to 96.57 as the euro rose 0.14% against the U.S. currency following better-than-expected business sentiment data in Germany. Earlier, Special Counsel Robert Mueller's investigation found that the Donald Trump campaign did not conspire or coordinate with Russia to influence the 2016 U.S. presidential election.
Sterling weakened 0.31% versus the dollar amid lingering uncertainties surrounding the U.K.'s impending departure from the European Union. It remains unclear whether the British parliament will have the chance to vote sometime this week on a short extension of the Brexit deadline proposed by the EU, amid reports that Prime Minister Theresa May has been pressured by her cabinet to step down.
Brent crude oil lost 0.10% to $66.96 per barrel on the ICE Futures Exchange. Gold rose 0.43% to $1,324.40 per ounce.
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The day ahead:
8:30 a.m. ET — Chicago Fed national activity index (Econoday consensus: 0.10)
10:30 a.m. ET — Dallas Fed manufacturing survey (Econoday consensus: 10.0)