Bonds, US-China trade, currencies in focus

Shares in Asia traded lower Thursday morning after the main yield curve in U.S. Treasurys inverted overnight, triggering fears over the state of the U.S. economy.

In Japan, the Nikkei 225 fell 1.91% in early trade, while the Topix index dropped 1.95%. Australia’s S&P/ASX 200 also tumbled 1.91%.

The MSCI Asia ex-Japan index shed 0.34% overall.

Investors will be watching the bond market today, after the yield on the benchmark 10-year Treasury note briefly broke below the 2-year rate overnight, an odd bond market phenomenon that has historically been a reliable indicator of economic recessions. The yield on the 30-year Treasury bond was also sent to a new record low on Wednesday.

The yield on the 10-year Treasury note was last at 1.5843%, as compared to the 2-year rate at 1.5812%.

Markets in South Korea and India are closed on Thursday for holidays.

Bank shares decline

Asia-Pacific Market Indexes Chart

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.949 after surging from levels below 97.8 yesterday.

The Japanese yen, widely viewed as a safe-haven currency, traded at 105.89 against the dollar after strengthening sharply from levels above 106.5 in the previous session. The Australian dollar changed hands at $0.6754 after dropping from levels above $0.676 yesterday.

Oil prices slipped in the morning of Asian trading hours after seeing sharp losses on Wednesday. International benchmark Brent crude futures declined 0.69% to $59.07 per barrel, while U.S. crude futures shed 0.53% to $54.94 per barrel.

Here’s a look at some of the data due today:

  • Australia: Employment data for July at 9:30 a.m. HK/SIN
  • China: Residential building sales for July at 9:30 a.m. HK/SIN
  • Hong Kong earnings: Ping An Group, Vanke

— CNBC’s Yun Li contributed to this report.

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