USA recession? These three currencies could benefit

Major U.S. stock indexes fell Friday as short-term Treasury yields exceeded those on long-term bonds in what some analysts consider a sign that a recession may be coming

Yield Curve, Federal Reserve and Recession Fears Go Mainstream

That pushed yields on 10-year US notes below the rate on three-month T-bills for the first time since the financial crisis.

Meanwhile, the yield on Germany's 10-year note - the safest of Europe's haven assets - dipped below zero on Friday, as economic data points to a recession in Europe's largest economy. Fear about the inverted yield curve contributed to Friday's 1.9 per cent tumble in the S&P 500 index - its worst day since January 3.

The gap between the 3-month and 10-year yields vanished on Friday as a surge of buying pushed long-end rates sharply lower.

The S & P 500 and Dow Jones Industrial Average were both down around 1.5% as of Friday afternoon. So if the stock market can hang in, I think the US can continue to see some growth.

Preliminary measures of U.S. manufacturing and services activity for March showed both sectors grew at a slower pace than in February, according to data from IHS Markit. The fall in the 10-year also weighed on the spread between 2- and 10-year yields, another significant measure of the yield curve. There's a lot of supply next week.

"There's growth concerns coming from everywhere - from Germany to the US", said Benjamin Lau, chief investment officer of Irvine, California-based Apriem Advisors, which manages around $740 million.

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Hours before the 10-year yield tumbled in Germany, its counterpart in Japan fell to the lowest since 2016, New Zealand's dropped below 2 per cent for the first time and Australia's was approaching an all-time low, as the world's major central banks wound up another week showing they can't yet tighten policy.

US President Donald Trump said negotiations were progressing and a final deal "will probably happen", adding that his call for tariffs to remain on Chinese imported goods for some time did not mean the talks were in trouble.

But the Japanese yen strengthened 0.62 percent versus the greenback at 110.14 per dollar, while Sterling was last trading at $1.3204, up 0.74 percent on the day.

The Markit Purchasing Managers' Index report, which tracks activity in the USA manufacturing sector, on Friday disappointed investors, with the headline index down 0.5 per cent to 52.5 versus the expected 53.6.

Markets in the United Kingdom and U.S. have tumbled with analysts attributing the drop to growing fears of a global slowdown.

U.S. crude fell 1.9 per cent to US$58.84 per barrel. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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