Here's what happened: The 10-year Treasury bond yield fell below 1.6% Wednesday morning, dropping just below the yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.
US stocks fell as investors sold stock in companies and moved it into bonds. The Dow(INDU) was about 2.4% lower. The broader S&P 500(SPX) was down 2.4% and the Nasdaq(COMP) sank 2.6% Wednesday.
CNN Business' Fear and Greed Index signaled investors were fearful. The VIX(VIX) volatility index spiked 20%.
As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.05%, the lowest rate on record.
Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.
Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.
Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.
That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started two full years after the December 2005 yield-curve inversion.
Here's what happened: The 10-year Treasury bond yield fell below 1.6% Wednesday morning, dropping just below the yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.
US stocks fell as investors sold stock in companies and moved it into bonds. The Dow(INDU) was about 1.8% lower. The broader S&P 500(SPX) was down 1.8% and the Nasdaq(COMP) sank 2% Wednesday.
CNN Business' Fear and Greed Index signaled investors were fearful. The VIX(VIX) volatility index spiked 20%.
As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.05%, the lowest rate on record.
Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.
Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.
Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.
That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started two full years after the December 2005 yield-curve inversion.
Here's what happened: The 10-year Treasury bond yield fell to 1.627% Wednesday morning, below the 1.632% yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.
US stock futures fell as investors sold stock in companies and moved it into bonds. The Dow(INDU) was set to open about 1.4% lower. The broader S&P 500(SPX) futures were down 1.4% and Nasdaq(COMP) futures sank 1.6% Wednesday morning.
CNN Business' Fear and Greed Index signaled investors were fearful. The VIX(VIX) volatility index spiked 10%.
As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.06%, the lowest rate on record.
Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.
Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.
Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.
That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started two full years after the December 2005 yield-curve inversion.
Here's what happened: The 10-year Treasury bond yield fell to 1.627% Wednesday morning, below the 1.632% yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.
US stock futures fell as investors sold stock in companies and moved it into bonds. The Dow(INDU) was set to open about 1.4% lower. The broader S&P 500(SPX) futures were down 1.4% and Nasdaq(COMP) futures sank 1.6% Wednesday morning.
CNN Business' Fear and Greed Index signaled investors were fearful. The VIX(VIX) volatility index spiked 10%.
Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets, despite the latest truce.
As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.06%, the lowest rate on record.
Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.
Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.
Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.
That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started two full years after the December 2005 yield-curve inversion.
The filing comes as WeWork, which rebranded to the We Company, is widely expected to go public as soon as September. WeWork was recently valued at $47 billion after SoftBank, the company's biggest backer, invested an additional $2 billion in January.
In the filing released Wednesday, the company reported revenues of $1.54 billion and a net loss of more than $900 million for the first six months of 2019. The company also reported that it had 527,000 members as of June 30, an increase of more than 90% from the year before.
It will trade under the ticker WE.
WeWork, which rents out co-working spaces to startups, freelancers and enterprises, has to plunge cash into real estate in some of the most expensive markets and makes money back over time as companies and individuals pay their rent, or membership. The company reported long-term lease obligations of $17.9 billion in the filing.
According to the prospectus, WeWork's biggest shareholders are the WE Holdings company and entities of Benchmark, JP Morgan and SoftBank. The WE Holdings company is controlled by WeWork CEO Adam Neumann.
The We Company filed confidentially for an IPO in April. The filing didn't include financial specifics, but in its first-quarter business update in May, the company said revenue more than doubled to $728.3 million, helped by expansion into international markets and growing memberships.
In an effort to sway investors, the company has tried to differentiate its losses from money-losing ride-hailing companies like Uber and Lyft, which both went public earlier this year. CFO Artie Minson told CNBC's Deirdre Bosa in May that investors should view WeWork's losses as "investments," adding that renting out work space is a "proven business model."
WeWork is reportedly planning to raise $3 billion to $4 billion in debt before its IPO to help fund growth and prove that it can reach profitability.
The company has been expanding beyond co-working spaces and into new markets. It has launched communal housing complexes under its WeLive business, as well as early education schools called WeGrow.
This story is developing. Please check back for updates.
Investing.com - Here are the top five things you need to know in financial markets on Wednesday, August 14:
1. Signs of economic downturn weigh on sentiment
Worrying data from China and Germany added to fears of a potential global recession.
China’s growth in July in another sign that the trade conflict between Beijing and Washington is denting the world’s second-largest economy.
Trade tensions also dragged on China’s consumer and business confidence with retail sales cooling more than expected while slower-than-forecast growth in revealed a marked loss of momentum.
Germany provided no relief to the gloomy outlook as a slump in exports drove its in the second quarter. The 0.1% quarter-on-quarter decline in led some analysts to speculate that the euro zone’s number one economy could enter recession in the third quarter as tariff conflicts and uncertainty over the U.K.’s departure from the European Union hit the country’s manufacturing sector.
2. Stocks pass from trade relief to economic worries
were mixed in Wednesday’s trade in the wake of Washington’s announcement a day earlier that it would delay the implementation of some tariffs on Chinese imports from Sept. 1 to Dec. 15.
The ensuing relief rally led to sharp gains on Wall Street at Tuesday’s close that quickly spread to Asian markets. Hong Kong’s was the exception, depressed by fears that Beijing will use force to crack down on local protesters.
But buying enthusiasm faded overnight with and U.S. futures pointing to a lower open as markets processed the fact that the U.S. delay in tariffs brought the two sides no closer to resolution.
3. U.S. 2- and 10-year notes on watch amid yield tailspin
A worldwide bond rally was back in swing sending yields on a sharp decline after a brief pause a day earlier.
Markets are keeping a close eye on the yields for the U.S. 2- and 10-year Treasury notes as the spread hovers around just one basis point. If the passes below that of the, it would result in an inverted yield curve that economists warn could be a sign of pending recession.
The flight to safety and central bank policy easing worldwide has sent bond yields into a tailspin. The on the German Bund, the euro zone’s safe-haven benchmark, hit a new record low of -0.64% after the GDP failed to elicit any signs of urgency from the government in providing some sort of fiscal support package to the economy.
4. Cisco steps up to earnings plate
Cisco (NASDAQ:) will be in the earnings spotlight after the close as the second-quarter reporting season winds down, with less than 50 S&P firms left on the calendar.
The company will report amid concerns that weaker enterprise spending on networking equipment may dent growth.
A slowdown in network spending was put in the spotlight last week when NetApp (NASDAQ:) warned its quarterly revenue would miss estimates, due to uncertainty over the global outlook.
5. Oil drops on unexpected inventory build
slid amid further signs of global economic weakness and a surprise build in U.S. crude stockpiles.
The American Petroleum Institute’s weekly report released late Tuesday showed that unexpectedly rose 3.7 million barrels.
The U.S. Energy Information Administration will release at 10:30 AM ET ( 14:30 GMT) amid expectations for a draw of 2.78 million barrels.
Read more: - Barani Krishnan
-- Reuters contributed to this report.
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BERLIN (Reuters) - A slump in exports sent Germany’s economy into reverse in the second quarter, data showed, as its manufacturers bore the brunt of a global slowdown amplified by tariff conflicts and uncertainty over Brexit.
FILE PHOTO: Volkswagen export cars are seen in the port of Emden, beside the VW plant, Germany March 9, 2018. REUTERS/Fabian Bimmer/File Photo
Gross domestic product (GDP) fell 0.1% quarter-on-quarter, in line with a Reuters poll of analysts, as several observers raised prospects of another contraction in the third quarter, and the industrial sector suggested the government should ditch its balanced budget and kick-start growth via fiscal stimulus.
On a calendar-adjusted basis, the annual growth rate in Europe’s largest economy slowed to 0.4% in the second quarter from 0.9% in the first, Wednesday’s Federal Statistics Office data showed. For 2019 overall, Berlin expects growth of just 0.5%.
“The bottom line is that the German economy is teetering on the edge of recession,” Andrew Kenningham from Capital Economics said, noting that exporters were facing an even bigger potential hit if a threatened no-deal exit from the EU by Britain actually materialized on Oct. 31.
Many economists define a recession as two consecutive quarterly contractions.
Despite Wednesday’s headline quarterly figure matching expectations, markets also took fright, with the yield on Germany’s benchmark 10-year government bond hitting a record low of -0.624%.
The global slowdown has impacted growth across western Europe, but Germany’s traditionally export-reliant economy has been particularly vulnerable.
The statistics office said that net trade slowed economic activity as exports recorded a stronger quarter-on-quarter decrease than imports.
Construction was also a drag, after the sector pushed up overall growth in the first three months due to an unusually mild winter.
“Today’s GDP report definitely marks the end of a golden decade for the German economy,” Cars ten Brzeski from ING said.
“It was a decade of strong growth on the back of earlier structural reforms, fiscal stimulus, localization at its peak and steroids provided by the ECB in the form of low-interest rates and a relatively weak euro.”
DOMESTIC SAFETY NET?
Domestic demand has become an important growth driver for Germany in recent years as consumers benefit from record-high employment, inflation-busting pay hikes and low borrowing costs.
Positive contributions came from that source in the second quarter, as household consumption, government expenditure and gross fixed capital formation increased on the quarter, the statistics office said.
But analysts suggested the positive impact of those factors was waning.
“For a year now, the German economy has been only crawling forward,” UniCredit analyst Andreas Rees said, with the many uncertainties facing German exporters presaging more pain in the rest of the year.
“Besides Brexit, this is above all the U.S.-Sino trade dispute and possible U.S. tariffs on European cars,” Rees said.
ING’s Brzeski said that, with trade conflicts, global uncertainty and the struggling automotive sector having “finally brought the German economy to its knees,” a national debate about fiscal stimulus would get more heated.
In an usual move, the powerful BDI industry association joined the growing chorus of voices demanding that the German government ditch its balanced budget rule.
“In contrast to the debt brake, which is enshrined in the constitution, the black zero (balanced budget) should be called into question in an economically fragile situation,” its managing director Joachim Lang wrote in a guest article in Wednesday’s edition of business daily Handelsblatt.
Slideshow (3 Images)
His comments came after a government official told Reuters last week that Berlin was considering issuing new debt to finance a costly climate protection package.
Chancellor Angela Merkel had on Tuesday poured cold water on domestic and international calls for more fiscal stimulus, saying there was no need “right now” for such a move.
Merkel also pointed to already agreed fiscal steps such as the abolishment of the Soli income tax surcharge for most employees from 2021, a relief worth some 11 billion euros per year that is likely to support domestic demand and with it overall growth.
Reporting by Michael Nienaber; editing by Thomas Seythal and John Stonestreet
