NEW YORK (Reuters) - Stocks around the world fell and U.S. Treasuries yields sent warning signals for a possible recession on Friday after weaker-than-expected U.S. and European data intensified fears of a global economic slowdown.
After weak U.S. manufacturing and services data, U.S. Treasury 10-year note yields sank below three-month Treasury bill yields for the first time since 2007. Investors fled from riskier bets as a yield curve inversion is seen as a leading recession indicator.
Earlier, German 10-year bond yields dived below zero for the first time since October 2016 after German data showed manufacturing contracted in March for a third straight month. Factory activity across the euro zone looked equally dismal.
Wall Street followed European shares lower and losses deepened even as strategists said a recession would take time to materialize or could even be averted.
“Our various models do see an uptick in recession probability but are flashing yellow versus red,” said Dan Ivascyn, group chief investment officer at Pacific Investment Management Co (Pimco) in Newport Beach, California.
All three major U.S. stock indexes registered their biggest one-day percentage losses since Jan. 3.
The Dow Jones Industrial Average fell 460.19 points, or 1.77 percent, to 25,502.32, the S&P 500 lost 54.17 points, or 1.90 percent, to 2,800.71 and the Nasdaq Composite dropped 196.29 points, or 2.5 percent, to 7,642.67.
The pan-European STOXX 600 index lost 1.22 percent and MSCI’s gauge of stocks across the globe shed 1.48 percent.
“The historical narrative behind that inversion is significant,” said Peter Kenny, Founder of Kenny’s Commentary LLC and Strategic Board Solutions LLC in New York.
“It is not however,
