Asian stocks rebound after two days of losses

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Equities recover as US 10-year treasury yields edge higher, but the outlook remains murky as traders wonder whether the US economy is in danger of slipping into recession

MSCI’s broadest index of Asia-Pacific shares outside Japan increases 0.3% while US recession fears remainA man stands in front of an electronic board showing the Nikkei stock index outside a brokerage in Tokyo, Japan. REUTERS/KIM KYUNG-HOON

Australian shares were flat, while Japan’s Nikkei jumped 1.8% after recording its biggest drop since late December on Monday.Wall Street shares were little changed on Monday with the S&P 500 ending with a small loss of 0.08%.Investors have been spooked by sharp falls in US bond yields and an inversion of the US Treasury yield curve, which is widely seen as an indicator of an economic recession.

The 10-year yield fell below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve. “I expect some correction to the latest rally in bonds. For now we have to see this week’s auctions,” he said.The treasury department will sell $113bn in coupon-bearing supply this week, including $40bn in two-year notes on Tuesday, $41bn in five-year notes on Wednesday and $32bn in seven-year notes on Thursday.US economic growth could be “pretty weak” in the first quarter but will likely be much closer to 2%-2.

The British pound stood at $1.3195, erasing small gains made after legislators voted to wrest control of the Brexit process from Prime Minister Theresa May’s government.

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