By CCN Markets: Dow Jones Industrial Average (DJIA) futures collapsed 200 points in early trading Thursday, before recovering slightly.
Traders remain nervous as the bond market flashed another dire warning overnight. Yields on the 30-year Treasury bond crashed below 2 percent for the first time in recorded history. It comes after Wednesday’s disastrous session which saw 800 points wiped off the Dow Jones.
A history on the 30-year US Treasury #yield in one chart! From above 15% in 1981 to below 2% now… pic.twitter.com/JvB1h47Bw2
— jeroen blokland (@jsblokland) August 15, 2019
Dow futures on a knife-edge ahead of nervous open
At 6.01 am ET, Dow Jones Industrial Average (DJIA) futures traded 100 points lower, after a spirited overnight rally was quickly wiped out. It comes after a muted Asian session which saw limited gains through the day.
S&P 500 futures mirrored the Dow’s losses with a 0.6 percent fall in early trading. Nasdaq Composite futures, however, ticked lower to 7,402.
30-year Treasury bond crumbles below 2%
Wall Street saw a new record overnight as the 30-year Treasury bond yield hit 1.9689 percent. It’s the first time on record it’s fallen below 2 percent and caps a long-term decline from 15 percent.
It’s the latest warning in a string of flashing recession indicators this week. Just yesterday, a yield curve inversion on the 10 and 2-year Treasury bonds sent investors into a blind panic.
These record moves in the bond market are broadly seen as a reaction to global instability and uncertainty about economic growth.
$16 trillion negative-yielding debt
But if the 2% breach sounds poor, spare a thought for those in Germany. The 30-year German bund is now at negative 0.201 percent. Meanwhile, the Japanese bond is hovering just above zero.
Across the globe, there is now more than $16 trillion of negative-yielding debt. As Jeroen Blokland explains, that’s 28% of outstanding debt at zero or negative rates.
“Surprise, surprise! The total amount of negative-yielding debt has topped USD 16 trillion for the for the first time ever. More than 28% of outstanding debt, tracked by the Bloomberg Barclays Global Aggregate Index, comes with a yield below 0%.”
There is now $16 trillion of negative yielding debt in the world. An all-time high.
That means that for more than 25% of global debt the lender is paying the borrower to take on the debt.
What an insane time to be alive.
— Pomp 🌪 (@APompliano) August 15, 2019
Dow rocked by more China backlash
In breaking news, China has issued yet another warning to the Trump administration. As reported by Bloomberg this morning, Xi Jinping threatened further “retaliatory measures” in the Sino-American trade war.
The State Council Tariff Committee said Trump’s additional 10 percent tariffs, due to come into effect in December, have violated the previous negotiations.
This article was updated at 6.03 am ET to reflect new price movements.
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