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Shares Collapsed, Bonds Rise As US Recession Risk Sparks Amber by Reuters



© Reuters . Women dressed in a ceremonial kimono, look at an electronic dashboard showing Nikkei's average after the TSE New Year's Eve ceremony held to win the success of the Japanese stock market in Tokyo

By Swati Pandey [19659004] SYDNEY (Reuters) – Investors put out stocks on Monday and escaped bond safety while the Japanese yen was moving close to a six-week high, as risky assets fell in favor of growing concerns about the upcoming recession in the US. December to a decline in global yields,

U.S. Stock futures became negative at the start of the Asian E-minis trade with 0.5%. MSCI's broadest Asia-Pacific Share Index outside of Japan dropped 0.6% to one-week low. The Japanese index fell by 2.9% and the Kospi index in South Korea declined by 1

.5%, while Australian shares fell by 1.3%.

On Friday, all three major US stock indices recorded their biggest losses in one day after they dropped Jan.3 by 1.8%, S & P 500 by 1.9%, and Nasdaq by 2, 5%

Global health concerns grew last week after the US Federal Reserve's cautious remarks sent the 10-year treasury yield to its lowest levels since early 2018.

Adding to fears of a wider global downturn, production data from Germany showed shrinkage for a third pore day month. And in the United States, the preliminary measures for production and services in March showed that both sectors are growing at a slower pace than in February, according to IHS Markit.

In response, the 10-year treasury yields fell below the quarterly value for the first time since 2007. Historically, the reversed yield curve – where long-term interest rates fall below short-term – signals a recession. "We're releasing our recession models on the preferred yield curve, which now suggest a 30-35 percent chance of recession in the US over the next 10 to 18 months," said Tapas Strickland, market strategist at the National Australia Bank. Normally, the likelihood of 40-60 percent sees recession within the next 10-18 months, adds Striklad, basing its analysis on past recessions.

"The recession risk in the US has risen and starts flashing with amber, and it will keep prices in markets with a high chance of lowering Fed prices."

As bonds rose on Monday, yields on 10-year Japanese government bonds fell to minus 8 basis points, the weakest since September 2016. Australian 10-year yields fell to a record low of 1.756.

POLITICAL PARTICIPANTS

Much of the concern about global growth stems from Europe and China, struggling with separate tariff wars with the United States.

Politics was also the focus of attention in the United States and the UK.

Long-awaited Muller tells whether Trump's campaign has fought a battle against Russia to help Trump beat Democratic Party opponent Hillary Clinton has taken an important step in his presidency while preparing for his re-election battle in 2020.

The political turmoil in the UK over the country's exit from the European Union remains unchanged in terms of risky assets.

On Sunday, Rupert Murdoch's Sun newspaper said on the front page that British Prime Minister Teresa May had to announce on Monday that he would withdraw as soon as a deal with Brexit was approved. The British pound was lower at $ 1.3189 after three consecutive days of wild thunder. Currency swaps 0.7 percent last week

In the forex markets, the Japanese yen – a safe haven – is close to its highest value since February 11. The Australian dollar, a risky liquidity proxy, declined for the third consecutive loss session at $ 0.7073.

In commodities, they fell 33 cents to 58.71 dollars a barrel. futures fell 24 cents to $ 66.79.


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