Here’s What the Bond Market Is Trying to Tell Investors

The bond market is sending a clear signal to investors, according to one analyst. On Wednesday, yields on 20-year Japan government bonds hit negatively territory for the first time ever. Yields on the 10-year Japan government bonds first turned negative back in February and have remained below zero since February 24. 'We've got risk aversion and a sign that maybe markets are starting to price in a recession,' said Craig Erlam, senior market analyst at Oanda, based in London. 'Whenever we see the yield curve flatten like we are seeing right now, that usually signals a market that's anticipating a recession and further monetary stimulus from the central banks.' Erlam said there's a 'good' chance of a recession in the next year, particularly in the UK, citing a growing number of global risks, including Brexit. TheStreet's Scott Gamm reports from Wall Street.