U.S. yield curve inverts again – Daily market moving news & events roundup, 28th August 2019

Market moving daily news roundup – events & news likely to move markets 28th August 2019

Company performance, economic and political events but especially market sentiment will always influence market movement, good or bad.

Summary

Economic calendar – scheduled news and events 28th August 2019

Germany – consumer confidence survey data due at: 07:00 BST

Germany – 10 year bond auction due at: 10:30 – 11:00 BST

U.S. – mortgage applications data due at: 12:00 BST

U.S. – various Federal Reserve Bank speeches due later today

Stock markets mixed as dark clouds gather

Investor uncertainty remains high as markets try to ‘get a feel’ of where it stands, as Trump’s tariff deadline approaches. U.S. yield curve inverts again, a sign of impending recession? Analysts seem to think so. Is China preparing for the worst? What exactly is Trump’s strategy?

Global markets are on edge waiting for his next move. On Monday 26th August 2019 – Trump reportedly suggested U.S. – China talks would resume, but China has yet to confirm this. Are markets ignoring the bad news? Are we facing the start of a major market downturn? Is China looking to play the long game here and not rush to a trade deal?

Is Trump on a mission to risk trade against recession to get the Fed to reduce interest rates? His trade ‘battle’ with China could then be blamed for causing a recession (if there is one) and the Fed will be forced to cut interest rates to prop up the economy? Just a thought, it is a complete guess as I have no idea as to what is really going on? Does anyone?

Interest rate cut

Markets are closely monitoring trade developments between the U.S. & China, the world’s two largest economies. The ongoing U.S. – China trade dispute has placed increasing pressure on global economies. The U.S. is set to start the next stage of U.S. tariffs on $300 billion of Chinese goods on Sunday 1st September 2019. China is also set to respond with tariffs on U.S. products on the same day.

Other market news

Asian markets hold steady. Japan’s Nikkei closed up at: 20479 – a gain of just 0.11%. Thomas Cook says it is closer to a deal. Ted Baker does a deal to sell its products in Japan. Job cuts announced at Virgin Australia. W H Smith expects to hit its financial targets for the year to the end of August.

UK government asks Queen to suspend parliament

Boris Johnson asks the Queen to suspend parliament. A decision that is expected to prevent opposition leaders from passing a law to stop a no-deal Brexit. The announcement is met with contempt from those opposed to a ‘no deal’ Brexit. Is the decision unconstitutional?

Sterling drops

Sterling immediately comes under even more pressure. The FTSE 100 morning gains remain as the pound devaluation benefits many companies in the FTSE 100. Unlike the FTSE 250 – which has businesses that are much more reflective of the UK economy – FTSE 250 falls. House builders and airline stocks take a hit.

UK – NatWest website down again today.

U.S – Dow opens at around 80pts down as the inverted yield curve persists. Nasdaq and S&P 500 also down at open. Facebook looking to improve procedures controlling political advertising.

Three things for investors to worry about as U.S. stocks fall.

  • Yield curve inversion
  • U.S. – China trade war tensions
  • Brexit

But not necessarily in that order…

U.S. bonds hit 30 year low – inverted yield curve

Investors have rushed to buy 30-year U.S. Treasury bonds as a potential safe haven for their cash as fears increase over the ongoing trade war between the U.S. and China, and as the economy shows signs that a recession could be around the corner.

The interest on a 30-year bond went below the yield paid on a 3-month bond. This can be a sign that investors believe their money is more at risk over the next year than over the next 30 years.

The ‘inverted yield curve’, when shorter-term bonds pay more interest than those with a longer duration, often acts as a warning sign of impending recession.

Today the yield paid on a 30 year bond fell to a record low of 1.49% before increasing.

Trump has another go at the Federal Reserve over monetary policy and interest rates via his favourite media, Twitter.

The Dow, Nasdaq and S&P 500 all finish the day up with the Dow closing up by 1% at: 26036

The Queen approves Parliament suspension.

The opposition party and other party members (conservative included) strongly oppose Johnson’s bold move to suspend parliament, labelling it a ‘constitutional crisis’. ‘They’ want more time to debate what parliament couldn’t agree on. ‘They’ have already spent the last three years ‘debating’ without agreement.

So why now do ‘they’ think a few more days in parliament will get the job done when they have all failed over the last three years? We have to leave the EU – that was the result of the referendum.

There was no discussion at the time of the referendum of how, the choice was simply a leave or remain vote. It has to happen with or without a deal.

Sterling remains volatile as Parliament is to be suspended.

Stock market indices update, August 28th 2019

Closing positions of: FTSE 100, DAX, DOW, S&P 500, NASDAQ, NIKKEI & GOLD

Main points update

UK Parliament to be suspended. China – U.S. trade war rumbles on. Yield curve invert some more, again. Brexit staggers to its next stage. Trump tweets his disdain for the Fed again and U.S. – China tariffs are due to start on 1st September 2019. Recession looms?

FTSE 100 – closed at: 7115

DAX – closed at: 11701

DOW – closed at: 26036

S&P 500 – closed at: 2888

NASDAQ – closed at: 7857

NIKKEI – closed at: 20479

GOLD – closed at around: $1,549

Key: Green highlight markets move up. Red highlight markets move down. All values rounded.

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