5 things to know before the stock market opens August 28, 2019

on Aug28
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1. Dow to open lower, again following bond yields lower

Traders work on the floor at the New York Stock Exchange, August 13, 2019.

Eduardo Munoz | Reuters

U.S. stock futures were pointing to a lower open Wednesday a day after the Dow Jones Industrial Average gave up nearly half of Monday’s 270-point bounce. The 623-point Dow plunge Friday, put August deeper into the red, risking the second monthly drop in an otherwise strong 2019. The culprit for the recent decline in stocks has been falling bond yields. Investors have been piling into the perceived safety of fixed-income on concerns about a global economic slowdown and the U.S.-China trade war.

2. 10-year yield inversion against 2-year deepens

With bond prices soaring in their reverse relationship with yields, the inversion of the 10-year Treasury yield deepened as it fell further below that of the 2-year on Wednesday morning. That inversion, the worst since 2007, has briefly happened a number of times in recent weeks. But this time it persisted since flip-flopping again Tuesday. Such a move has preceded every recession in the U.S. over the past 50 years, though the economic downturn on average tends to lag by up to two years.

3. 30-year yield goes below S&P 500 dividend yield

The 30-year Treasury yield went below 2% again, hitting a new record low Wednesday morning after dropping below the S&P 500′s stock dividend yield on Tuesday for the first time since 2009. Bespoke Investment Group examined data going back four decades. Other than the financial crisis, the only other time when a similar stock-bond inversion came close to happening was in July 2016, right after the Brexit vote.

4. British pound falls in the latest twist on Brexit

Britain’s new Prime Minister Boris Johnson gives a speech outside 10 Downing Street in London on July 24, 2019 on the day he was formally appointed British prime minister. – Boris Johnson takes charge as Britain’s prime minister on Wednesday, on a mission to deliver Brexit by October 31 with or without a deal.

BEN STANSALL | AFP | Getty Images

The British pound dropped against the U.S. dollar Wednesday morning after U.K. Prime Minister Boris Johnson said he would schedule the formal reopening of parliament for Oct. 14 — a highly controversial move that would restrict lawmakers’ time to act before the Brexit deadline two weeks later, and increase the chances of the U.K. leaving the European trading bloc with no deal. Johnson is seeking to strike a renewed departure agreement with the EU.

5. Purdue Pharma offers up to $12 billion to settle more than 2,000 opioid lawsuits

OxyContin, made by Purdue Pharma

George Frey | Reuters

Purdue Pharma and its owners, the Sackler family, are offering to settle more than 2,000 lawsuits against the company for $10 billion to $12 billion. The potential deal was part of confidential conversations and discussed by Purdue’s lawyers at a meeting in Cleveland last week on Aug. 20, two people familiar with the mediation told NBC News. Privately held Purdue Pharma makes the opioid painkiller OxyContin. On Monday, an Oklahoma judge ruled against Johnson & Johnson in the state’s opioid lawsuit, ordering the company pay a $572 million fine. J&J plans to appeal.

CNBC’s before the bell news roundup

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