The yen is getting stronger, shares slip in fear of the US recession



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SYDNEY (Reuters) – The Japanese yen ran close to the six-week high price on Monday, while Asian shares are expected to decline as risky assets were reduced to an increasing concern over the coming US recession, as global bond yields fell.

In the illustration picture, which was taken on June 1, 2017, the note of the Japanese yen is visible. REUTERS / Thomas White / Illustration

In Asia, Nikkei futures showed a weak start to Japan. Australian shares fell 0.3 percent in the open, and the New Zealand index fell 0.9 percent.

Investors also took note of the details of a nearly two-year US investigation that found no evidence of collusion between the Donald Trump and Russia constituency, which was a major political victory for the US president.

FX contracts in the US were slightly higher in the early Asian hours.

On Friday, all three major US stock indices recorded the largest single-day loss since January 3, when Dow fell 1.8 percent, S & P 500 by 1.9 percent and Nasdaq by 2.5 percent.

Concerns about the health of the global economy intensified last week, when cautious comments by the US Federal Reserve sent a 10-year treasury yield to its lowest level since the beginning of 2018. In addition to the fears of a wider global recession, production data from Germany was shown for the third consecutive month.

In response to this, the 10-year yield of the treasury fell for the first time after 2007 below a three-month interest rate. Historically, the curve of return is reversed, where long-term interest rates are falling short-term, pointing to a future recession.

"We have relaunched our recession-based recession models with a yield curve now showing a 30-35 percent probability that the US recession will emerge in the next 10 to 18 months," said Tapas Strickland, a market strategist at National Australia Bank.

Usually, the 40-60% probability sees a recession in the next 10-18 months, Strickland added, who based his analysis on previous recessions.

"The risk of a recession in the United States has increased and blazed orange, which will allow markets to appreciate the high potential for cutting the Fed."

Many concerns about global growth come from Europe and China, which is struggling with separate tariff wars with the United States. Political turmoil in Great Britain due to the country's exit from the European Union is also a big surplus for risky assets.

On Sunday, Sun Rupert Murdoch newspaper was addressed by British Prime Minister Theresa May, who will announce on Monday that he will resign as soon as her agreement on Brexit is approved.

After three consecutive days of wild gyration, the British pound was just $ 1.3209. Last week, the currency fell 0.7 percent.

Policy was also centered on the United States.

The long-awaited Mueller reported that the Trump campaign had concluded an agreement with Russia to help Trump defeat its democratic opponent, Hillary Clinton, which represented a major milestone in his presidency when preparing for his newly-elected battle in 2020. t

On currency markets, the Japanese yen – a detected safe haven – kept close to its highest price range since February 11th.

The Australian dollar, a liquid proxy for risk play, fell for the third consecutive loss session at $ 0.7072.

Editing Shri Navaratnama

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