Stocks plunge alongside bond yields

|By:, SA News Editor

Stocks open with sharp losses, erasing yesterday's gains, as economic growth concerns spark a lack of confidence in risk assets; Dow -2.2%, S&P -1.9%, Nasdaq -1.6%.

"A sharp decline in Treasury yields is raising the 'Fear Factor' over the impact of the trade war on the economy," says Peter Cardillo, chief market economist at Spartan Capital Securities.

The spread between the two-year and 10-year yields has narrowed to 9 bps this morning, which has coincided with another big drop in yields; currently, the two-year yield is 8 bps lower at 1.53% while the 10-year yield is down 12 bps to 1.62%.

Three more central banks - in India, Thailand and New Zealand - cut their interest rates overnight, and the low-to-negative sovereign bond yields around the world likely is driving demand into U.S. Treasurys as investors pile into positive-yielding "safe" assets.

All 11 S&P 500 sectors trade lower, with financials (-2.2%) and energy (-2.1%) leading the decline.

Meanwhile, European bourses cling to gains, with Germany's DAX and France's CAC both +0.3% and U.K.'s FTSE +0.1%; in Asia, Japan's Nikkei and China's Shanghai Composite both closed -0.3%.

U.S. WTI crude oil -3.3% to $51.84/bbl, weighed by the weakening outlook for the global economy and energy demand.

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