Sunday , July 3 2022

US stocks early – Dow Jones opened over 400 points 10y2y yield curve for the first time in 2007 "reversed" | Anue Yu Heng


On Wednesday evening, the 10-year US yield less than the 2-year spread yield set the first record at a "disadvantage" in 2007, and the deepest dropped to -1.60%, accompanied by a rapid rise in bond yields. market. Risks, market economists are very concerned that the US economy is facing a recession, dragged on Wednesday (14) US shares closed above 400 points.

The 10-year US bond yield minus the 2-year yield is a long-term indicator for economists to focus on the "recession," while the other 10-year US bond yield is reduced by a 3-month spread. It was already overturned in May of this year.

Red: US debt 10 years US bond yield minus 2 year spread Blue: US debt 10 years US yield less than 3 months spread Photo: Fred
Red: US debt 10 years US bond yield minus 2 year spread Blue: US debt 10 years US yield less than 3 months spread Photo: Fred

From the rush hour on Wednesday (14) on the evening of the 22nd evening:

  • The Dow Jones index fell 426.78 points or 1.62% to 25,853.13 points
  • Shares fell 36.16 points or 2.43% to 1453.22 points
  • TSMC ADR (TSM US) fell 2.29% to US $ 40.87 per share
  • Ten-year US bond yields dropped 4.59% to 1.603%
  • New York Light Crude Oil (WTI) fell 3.45% to $ 55.13 a barrel
  • Gold rose 0.73% to $ 1525.15 an ounce
  • VIX panic index rose 15.75% to 20.36 points
Dow Jones Index Daily Chart Source:
Dow Jones Index Daily Chart Source:

At the same time that the 10-year US debt obligation fell two years, the three-year spread on Wednesday (14), the 30-year yield on US debt also reduced to a new three-year low of 2.059%. Minimum of the lowest record of 2.0882% in July 2016.

Economists believe that the recent coveted risk in the bond market has already predicted that the United States will face the risk of deflation, which may cause the U.S. economy to progress into a recession, that is because the trade war has caused hot economic risks and then will affect the United States. Economy.

Although the US yield curve has been at a disadvantage in the face of the US economic downturn over the past 50 years, it has fully played the role of a risk forecast, but it is worth noting that the yield curve cannot accurately note the "interest rate" and how much time passes. A recession will happen.

To respond to the recession, do you still have to rely on the Fed?

On the other hand, given that the US stock yield curve has reversed after 12 years, the current federal interest rate future is 100% expected, the Fed will cut interest rates again in September this year, a 71.5% chance of waiting for Fed October. After the interest rate cut and the Fed cut interest rates by one yard in July this year, the market estimates that the Fed will complete the 3-yard interest rate this year.

Investment bank Morgan Stanley also predicted in a recent research report that the Fed will cut interest rates by one yard in September and October this year, and may fall another four yards by 2019.

Responding to the declining US bond yield, Alan Greenspan, the former Fed chairman on Tuesday (13), also said that there may be no way to halt US yields on a fund, even Collins. Pan expects that US bond yield may change to "below 0%", suggesting that US bond yields may also fall into "negative yield".

According to the latest data, the Fed's global size obligation and Asian central banks such as Australia, New Zealand, India, Indonesia, South Korea and other countries have reached a record $ 15 trillion in "negative yield". New high in history.

Key economic data today:

Germany announced on Wednesday (14) that the Q2 GDP growth rate was -0.1%, which was captured by the "negative growth". Market economists have openly said that the German economy has slowed down due to the slowdown in China's economic demand. .

  • Germany T2 GDP initial growth rate -0.1%, in line with expectations
  • Germany's initial GDP growth rate of 0.4%, better than expected 0.1%
  • Eurozone Q2 GDP's initial growth rate of 0.2, as expected
  • Eurozone Q2 GDP's initial growth rate of 1.3%, as expected

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