Finance

Yields on long-term investments fall to record low amid recession fears

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Returns on a key long-term investment fell to a record low Wednesday, adding to fears of a slowing economy amid an escalating trade war with China.

The yield on 30-year Treasury bonds dropped to 1.907 percent, below the previous record of 1.916 percent set earlier this month.

{mosads}When investors are concerned about the state of the economy, they often move their investments toward safe assets such as long-term bonds, driving up their prices. As the prices of those bonds increase, that leads to a decline in the return, or yield.

The decrease extended a phenomenon known as an inverted yield curve, in which investors can get higher returns on short-term bond investments rather than long-term ones. The inverted yield curve is considered one of the best indicators of a possible recession about 18 months down the line.

The warning signs on Wall Street come as President Trump’s trade war with China is scheduled to enter a new phase.

The U.S. is slated to impose 15 percent tariffs on a slew of Chinese imports starting Sept. 1, up from the previously planned 10 percent tariffs. Another round of tariffs is scheduled to take effect on Dec. 15.

Separately, Trump is planning to increase existing tariffs on billions of Chinese imports from 25 percent to 30 percent on Oct. 1.

An economic slowdown would spell trouble for Trump in his bid for a second term in the White House. The president has made the economy a centerpiece of his administration, and has sought to cast aspersions on any implication that economic growth is slowing significantly.

“The Economy is strong and good, whereas the rest of the world is not doing so well,” he tweeted last week. “Despite this the Fake News Media, together with their Partner, the Democrat Party, are working overtime to convince people that we are in, or will soon be going into, a Recession.”

Tags Bonds China Donald Trump economy Investments Recession Wall Street Yield

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