INSUBCONTINENT EXCLUSIVE:
Investors ditched shares on Monday and fled to the safety of bonds while the Japanese yen hovered near a six-week high as risk assets fell
out of favour on growing fears about a US recession, sending global yields plunging.US stocks futures fell, with E-minis for the SP 500
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.4 per cent to a one-week trough in a broad sell-off in equities in the
region.Japan's Nikkei tumbled 3.2 per cent to the lowest in two weeks, South Korea's Kospi index declined 1.6 per cent while Australian
shares faltered 1.3 per cent.Chinese shares also declined with the blue-chip CSI 300 index down 0.8 per cent.On Friday, all three major US
stock indexes clocked their biggest one-day per centage losses since Jan.3
The Dow slid 1.8 per cent, the SP 500 was off 1.9 per cent and the Nasdaq dropped 2.5 per cent.Concerns about the health of the world
economy heightened last week after cautious remarks by the US Federal Reserve sent 10-year treasury yields to the lowest since early 2018.US
10-year treasury yields were last 1.9 basis points below three-month rates after yields inverted for the first time since 2007 on Friday
Historically, an inverted yield curve - where long-term rates fall below short-term - has signalled an upcoming recession."The bond market
price action is an enormous blaring siren to anyone trying to be optimistic on stocks," JPMorgan analysts said in a note to clients."Growth,
and bonds/yield curves, will be the only thing stocks should be focused on going forward and it's very hard to envision any type of rally
until economic confidence stabilizes and bonds reverse."Compounding fears of a more widespread global downturn, manufacturing output data
from Germany showed a contraction for the third straight month
And in the United States, preliminary measures of manufacturing and services activity for March showed both sectors grew at a slower pace
than in February, according to data from IHS Markit.National Australia Bank's yield curve recession modelling is pointing to a 30-35 per
cent probability of a US recession occurring over the next 10-18 months."The risk of a US recession has risen and is flashing amber and this
will keep markets pricing a high chance of the Fed cutting rates," said London-based NAB strategist Tapas Strickland.As bonds rallied on
Monday, yields on 10-year Japanese government bonds slumped to minus 9 basis points, the weakest since September 2016
Australian 10-year year yields plunged to a record low of 1.754.Some analysts, such as ING's Rob Carnell, advised against rushing to place
bets on the yield inversion."We suspect that drawing a recession conclusion from such data is not warranted until the 3M-10Y yield curve is
inverted by a substantial amount," Carnell said
"Just inverted as today's markets indicate, doesn't do it for me."Political HeadwindsMuch of the concerns around global growth is stemming
from Europe and China which are battling separate tariff wars with the United States.Politics was also in focus in the United States and
Britain.A nearly two-year US investigation found no evidence of collusion between Donald Trump's election team and Russia, in a major
political victory for the US President as he prepares for his 2020 re-election battle.Political turmoil in Britain over the country's exit
from the European Union also remains a drag on risk assets.On Sunday, Rupert Murdoch's Sun newspaper said in a front page editorial British
Prime Minister Theresa May must announce on Monday she will stand down as soon as her Brexit deal is approved.The British pound was a shade
lower at $1.3198 after three straight days of wild gyrations
The currency slipped 0.7 per cent last week.In currency markets, the Japanese yen - a perceived safe haven - held near its highest since Feb
It was last 0.1 per cent higher at 109.77 per dollar.The Australian dollar, a liquid proxy for risk play, was down for its third straight
session of losses at $0.7076.In commodities, US crude fell 61 cents to $58.43 per barrel
Brent crude futures eased 60 cents to $66.43.Get the latest election news, live updates and election schedule for Lok Sabha Elections 2019
on TheIndianSubcontinent.com/elections
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