US 10-year yields hit 15-month lows, as Turkey's lira slumps 5% and sterling slides as Brexit votes go nowhere
London — Global bond yields continued to spiral lower on Thursday as recession fears fed expectations of more policy easing by major central banks, while Turkey’s lira took a 5% beating as pressure ratcheted up on its volatile markets again.
A Reuters report that the US and China had made progress in all areas in trade talks seemed to bolster sentiment a little, though sticking points still remained and there was no definite timetable for a deal. “We think that the ongoing flattening, or outright inversion, of the curve is a bad sign for equities, as it usually has been in the past,” said Oliver Jones, markets economist at Capital Economics. “Arguments that the yield curve is no longer a reliable indicator seem to resurface every time it inverts, only to be subsequently proved wrong.”
That shift came hot on the heels of a dovish surprise on Wednesday from the Reserve Bank of New Zealand, which abandoned its neutral bias to say the next rate move would likely be down. Yields in both New Zealand and neighbour Australia, sank to record lows in response.Turkey’s lira, one of the currencies at the heart of last year’s emerging-market meltdown, plunged as much as 5% against the dollar amid worries that the economic and geopolitical risks are on the rise again there.
Elsewhere, hints of rate cuts from New Zealand’s central bank had the desired effect on its currency, which was pinned at $0.6816 after dropping 1.6% overnight. The Aussie was on the defensive at $0.7090.
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