The bond market is saying scary stuff

[Bloomberg]( Today’s Agenda - The bond market is [sending dire warnings]( about the economy. - Trump’s trade war may accidentally [boost China’s influence](. - It’s increasingly [difficult to get wealthy]( in America. - WeWork’s [a weird company](. Inversion Therapy The bond market has gone through the looking glass, taking us on a miserable adventure in whatever the opposite of Wonderland is. Yes, the moment we’ve all been waiting for/dreading has arrived: Ten-year Treasury notes this morning briefly yielded less than two-year Treasury notes. You’re excused if you have not, in fact, been waiting for this moment or even know what those words mean. But this esoteric event – an “inversion” of one part of the “yield curve” – is widely seen in the market as a [reliable signal]( of a recession in the near future. Other parts of the curve have been inverted for a while, but this may clinch it. Stocks, which yesterday rose on hopes of a trade-war truce, [cratered](. The bond market, which had no such optimism yesterday, notes Robert Burgess, once again [wins the award for prescience](. Even grimmer than the inverted yield curve is the signal sent by 30-year Treasury yields falling to a new record low of a smidgen north of 2%, writes Brian Chappatta. In normal times, lending money for decades, even to a safe credit such as the U.S. government, entails relatively high rates of interest. A 30-year yield this low suggests the [bond market has given up on any hope]( of economic growth and inflation for decades to come. Bad economic data from China and Germany this morning triggered the panic. On the plus side, a German recession might finally inspire [Angela Merkel to ditch that country’s unhelpful zero-deficit policy](, writes Leonid Bershidsky. But these numbers also mean the trade war has already damaged the global economy. President Donald Trump’s wild, unpredictable moves in the trade war have [increasingly convinced businesses that he has no idea what he’s doing](; no goal, and no guiding principles -- aside from maybe knee-jerk protectionism, writes Michael Strain. This makes it impossible for them to plan, which makes them less likely to invest, which hurts the economy. Trump’s answer so far has been to [harangue]( the Federal Reserve to further cut rates. It’s certainly in a bad spot, feeling forced by the president’s trade war into cutting rates while the U.S. economy is still reasonably strong. The Fed hasn’t helped itself, though, by sending mixed signals about its policy thinking, writes Clive Crook. This is a good time to [radically overhaul how it sets and communicates policy](. It should be an adventure. Further Disappearing-Rate Reading: The Swiss National Bank is trying to weaken its currency to help exporters, but it’s [racing the ECB to slash rates well below zero](, punishing its banks and savers. – Marcus Ashworth Trump’s Trade War Backfires Another Way One possible aim of Trump’s trade war is to weaken China’s global influence. How’s that working out? Not so great lately, writes Shuli Ren: The Asian exporters in China’s orbit are suffering economically as global trade collapses. So these countries need to stimulate their economies. It just so happens China has a Belt and Road infrastructure initiative standing by, to shower these economies with loans. Et voilà : [China’s influence is back on the rise](. Wealth Today, in Two Charts One big problem with falling into a recession is that poor and middle-class [Americans are already struggling to grow wealthy](, writes Noah Smith. Here’s a striking chart: What happens when a recession makes this an even steeper climb? A lot more political unrest, for one thing. American debt burdens have at least shrunk in the decade since the previous recession, and mortgage debt is no longer a major source of pain. But [student loans have taken its place](, writes Brian Chappatta, resulting in a stubbornly high percentage of debt qualified as “severely” delinquent: WeWork Is Way Weird One of the last unicorns to leave the magic forest is one of the most magical; if by “magical” you mean “bizarre.” WeWork Cos. [filed]( IPO documents today, declaring it wants “to elevate the world’s consciousness,” even though it’s basically “an office subleasing company on steroids,” in Shira Ovide’s words. Like most unicorns – private companies valued at more than $1 billion – it’s growing quickly but losing tons of money. Shira isn’t sure how sustainable that growth is, though. She’s also never seen a company that needs 10 pages of an IPO prospectus to [explain the labyrinthine network of possible conflicts]( of interest of its flamboyant CEO. Enjoy, stock investors. Telltale Charts Macy’s Inc. is one of many American retailers at risk in the trade war. But its latest earnings report shows [it has trouble selling clothes]( even without tariffs, writes Sarah Halzack. Further Reading Amazon.com Inc.’s worker training program isn’t nearly enough; the jobs of the future will [require much more retraining](, and only the government has the scale needed. – Bloomberg’s editorial board It wouldn’t be anything like political suicide for a [Republican to challenge Trump]( for the nomination. – Jonathan Bernstein The [bond-rating companies still have conflicts]( that need fixing. – Barry Ritholtz India’s richest man says he’s bullish on the economy, but [his actions say otherwise](. – Andy Mukherjee China’s [investment in coal is rising,]( but that may not spell doom for the climate. – David Fickling Conservatives should support [market-based controls on air pollution](, if only because it’s the right thing to do economically. – Karl Smith Making [mass transit more easily accessible]( can get cars off the road and curb carbon emissions. – Mark Buchanan Watch out, Google: [YouTubers are joining unions](. – Alex Webb ICYMI Listen to unearthed [2003 recordings of a Jeffrey Epstein]( interview. Overstock stock tanked on its [CEO’s “Deep State” fears](. [Bitcoin took a beating](. (We [warned]( you!) Kickers Pro Tip: [Don’t use “NULL”]( as your license-plate number, unless you enjoy getting tickets. The [disaster-prep business]( is booming. (h/t Scott Kominers for the first two kickers) Microplastics are [turning up everywhere](. How [“Wayne’s World” changed movie]( comedy. Note: Please send Grey Poupon and complaints to Mark Gongloff at mgongloff1@bloomberg.net. New to Bloomberg Opinion Today? [Sign up here]( and follow us on [Twitter]( and [Facebook](. [FOLLOW US [Facebook Share]]( [Twitter Share]( SEND TO A FRIEND [Share with a friend] You received this message because you are subscribed to Bloomberg's Bloomberg Opinion Today newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022