U.S. stock index futures edged lower Tuesday morning, following steep losses in the previous session as falling bond yields raised concerns about the global economy.
The widely watched 2-year to 10-year spread narrowed to only 4.68 basis points on Tuesday, with the curve at its flattest level since 2007, close to sending bond market’s biggest recession signal yet.
The Dow slumped nearly 400 points on Monday to fall back below 26,000, while the benchmark 10-year Treasury yield dipped to 1.63%.
Market sentiment was already fragile due to increasing signs that the world’s two largest economies — the U.S. and China — are unlikely to quickly resolve their protracted trade war. The two countries will resume trade negotiations in Washington in early September.
China once again fixed its yuan midpoint at 7.0326 per dollar on Tuesday, the fourth consecutive session where the People’s Bank of China set the figure at a level weaker than the psychologically 7-yuan-per-dollar level.
On the data front, the key annualized and monthly Consumer Price Index (CPI) and core CPI data for July will be released at 8:30 a.m.