US 30-year Treasury yields fell to a record low below 2% and benchmark 10-year notes dropped to a three-year trough on Thursday amid persistent worries about global trade tensions and economic slowdowns around the world. Such bank shares include those of Bank of America, Citigroup and JP Morgan.
US economic growth slowed to 2.1 percent in the second quarter of this year, marking a sharp slowdown from the 3.1-percent expansion in the previous quarter.
Asian markets fell on Thursday after the Dow suffered its worst day of the year as fears of a global recession mounted with investors fleeing equities.
The editorial board of the Wall Street Journal (WSJ), however, has warned the Trump administration that mistakes in trade policy could turn US economic slowdown into recession.
Yet the investment expert suggested that Wall Street should not be overly concerned about the link between inverted yield curves and a future recession.
The benchmark 10-year Treasury note yield fell below 1.6 percent on Wednesday.More news: Emery speaks out on Ozil and Kolasinac’s chances of playing against Burnley
Matthew Cheslock, a trader with USA firm Virtu Financial, voiced similarly positive views, saying that it might still be early to time a recession based on Wednesday's yield curve inverts.
As investors switched on a risk-off mode and resorted to long-term, safe-haven assets, such as US treasury bills, gold and low-risk currencies, the price of gold rallied and the 30-year treasury bond yield hit an all-time low of a bit over 2 percent.
Recession fears grew on Wednesday after yields on 10-year Treasury bonds US10YT=RR dropped to less than two-year rates for the first time in 12 years, when the same yield curve inversion presaged the 2008 recession.
"Even if it is accurate in foreshadowing a recession, that doesn't mean it's coming tomorrow", he added.
"While the global economy continues to slow and trade tensions weigh on the outlook, we still believe that we are not on the brink of a U.S. or global recession", said Esty Dwek, head of global market strategy for dynamic solutions at Natixis Investment Managers.
USA gold futures GCv1 settled up 0.2% at $1,531.20.More news: Uganda slams report Huawei helped spy on Bobi Wine
"Hoping for the best on the policy front but positioning for the worst on the economic backdrop seems to be the flavour of the day", said Stephen Innes, a managing partner at Valour Markets.
The spread between 2-year and 10-year note yields widened a bit on Thursday at 1.8 basis points US2US10=TWEB.
Mark Haefele, chief investment officer at UBS Global Wealth Management said how long the curve remained inverted, and to what extent, was crucial. "We saw the same type of event happen last week. Then we recouped most of those losses over the next couple of days".
The dollar recovered from early weakness against the safe-haven yen on the better-than-expected US retail sales.
"At the moment, data is generally pointing towards trend growth, with some exceptions such as Germany, which contracted in the second quarter". Gains were mainly concentrated in consumer staples and utilities stocks.
Financials were the other main laggards.More news: Clarke and Harman ‘prepared to lead government’ to prevent no-deal Brexit
"Although volatility may continue, our outlook for US corporate earnings remains strong although tariffs may force a modest trimming", Falconio noted.