US Equities Down After Trump Renews Attacks on Fed

U.S. stocks slipped on Wednesday, as investors reeling from rising trade tensions fled riskier assets for perceived safer havens, leading the bond market to price in a slide into recession.

U.S. Treasury yields took another dramatic drop and the premium on three-month bill rates above 10-year note yields was at its most elevated levels since March 2007. This so-called inversion between the two maturities has preceded every U.S. recession in the past 50 years.

The drop in yields also reflected a jump in expectations that the Federal Reserve would cut key borrowing costs three more times by year-end, with markets fully pricing in a reduction in September.

“Whether the U.S. economy is strong enough to withstand the next phase of a trade war is giving people concern right now,” said Mike Loewengart, vice-president of investment strategy at E*Trade Financial in New York.

via Reuters

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