U.S. 10-year Treasury yield slumps to fresh low on resumed trade war panic, global growth worries

The U.S. 10-year Treasury yield plunged to a fresh multi-year low during Wednesday’s afternoon session, following the negative tone around the trade war, fuelled by reports that China will use its dominance of rare earths as a response to higher tariffs imposed by the former amid burgeoning concerns over a slowing global economy.

Further, the yield spread between the 3-month and 10-year yield widened further, thus inverting the two curves, which is, historically, seen by some economists as a major indication of solid recession.

The yield on the benchmark 10-year Treasury yield slumped nearly 3-1/2 basis points to 2.236 percent, the super-long 30-year bond yields also suffered 3-1/2 basis points to 2.673 percent and the yield on the short-term 2-year too traded nearly 3-1/2 basis points lower at 2.085 percent by 14:15GMT.

US stock index futures point to a lower opening, amid mounting worries over the global growth outlook following recent poor PMI releases for May across the globe. Meanwhile, the US-China trade dispute shows no signs of easing, while political uncertainty in Europe prevails after the European Parliament election result leaves a more fragmented parliament, Eurobank Economic Analysis & Financial Markets Research reported.

On the data releases, it should be a quiet day for top-tier releases with just the Richmond Fed Manufacturing Index due for release. Supply-wise, the US Treasury will sell 2-year floating-rate and 7-year fixed-rate notes, Daiwa Capital Markets reported.

Meanwhile, the S&P 500 Futures traded 0.22 percent lower at 2,825.62 by 14:20GMT, while at 14:00GMT, the FxWirePro's Hourly Dollar Strength Index remained highly bullish at 115.92 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex