Inflation and property prices ease in China

Inflation in China eased for the third consecutive month in October on government policy tightening that has also started to drive residential property prices down with greater momentum.

China’s annual inflation rate fell to 5.5%, the country's National Bureau of Statistics said Wednesday, down from 6.1% in September.

The decline potentially gives the central government room to ease new credit after months of strict controls aimed at cooling down the country’s overheated economy.

Looser bank lending may soon be necessary to blunt the effects of another global recession and carefully guide economic growth down from unsustainable annual rates of 9% to 10%.

“Weakness in the export sector will be the main hindrance to economic growth in the coming quarters,” Jing Ulrich, an economist for J.P. Morgan, said in a research note. “However, with falling inflation clearing the way for policy easing, we believe that China will manage a ‘soft landing,’ achieving respectable GDP growth of 8.3% in 2012.”

That will require delicate policy tinkering as signs are growing that China’s frothy property market has begun its long-awaited correction.

A national index of property prices in 100 cities has declined two consecutive months as cash-strapped developers are experiencing steep declines in sales.

Tight credit and rules targeting speculators could drive prices down 10% to 30%, according to Barclays Capital.

That’s a relief to potential homebuyers priced out of the market and to a government worried a property bubble was stoking social instability.

So far, only angry homeowners have openly protested changes in prices. Last month, hundreds gathered outside the offices of a Shanghai developer that cut prices, demanding refunds and contract cancellations.

The government risks sinking prices at its own peril. Real estate accounts for a fifth of China’s economy, according to some estimates, and contributes up to half of local government revenue in the form of public land sales.

Still, Premier Wen Jiabao remains committed to driving residential prices down.

“We aim to lead housing prices back to a reasonable level and promote a healthy development of the real estate industry at the same time,” Wen told reporters Sunday.

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-- David Pierson  

twitter.com/dhpierson

Photo: Two women look at buildings under construction in Chongqing, China. Credit: Getty Images

Wall Street: Gold falls, stocks waver

Gold: Trading now at $1,639 an ounce, down 2.3% from Monday. Dow Jones industrial average: Trading now at 11,414.56, up 0.2% from Monday.

Uncertainty. Stocks are wavering as investors digest earnings reports and news from Europe.

Bad for banks. This morning's earnings announcements from Goldman Sachs and Bank of America confirmed that Wall Street is indeed hurting.

A man of many contradictions. One of the men who has given to the Occupy Wall Street protests and spent time in Zuccotti Park, the epicenter of the New York demonstrations, is also a former Wall Street trader and current donor to Mitt Romney.

Blaming Madoff. Bernard Madoff's daughter-in-law breaks her silence and blames the Ponzi schemer for her husband's suicide.

Stone on the Street. Oliver Stone took on Jamie Dimon and the rest of the Wall Street crowd after a screening of his film about the industry.

Fat cats. The real fat cats of Wall Street.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Wal-Mart executives resign in China labeling scandal

Wal-Mart said Monday it was replacing the head of its operations in China, the giant U.S. retailer's latest setback in the country after employees were arrested and detained last week in the western city of Chongqing in connection with a labeling scandal.

The company said in a statement posted on its website that Ed Chan, its chief executive in China since 2007, was leaving the company for personal reasons. Clara Wong, a senior executive for human resources, was also stepping down, the statement said.

Though Wal-Mart did not link the personnel moves to the controversy in Chongqing, the company continues to deal with fallout from charges that it sold about 140,000 pounds of pork over the last two years that was mislabeled as a more expensive organic variety. The added cost to consumers amounted to about $115,000, according to the city government's website.

Wal-Mart executives resign in latest set-back for U.S. retailer in China

Wal-Mart said Monday it was replacing the head of its operations in China, the latest set-back in the country for the giant U.S. retailer after employees were arrested and detained last week in the western city of Chongqing over a labeling scandal.

The company said in a statement posted on its website that Ed Chan, its CEO in China since 2007, was leaving the company for personal reasons. Clara Wong, a senior executive for human resources was also stepping down, the statement said.

Though Wal-Mart did not link the personnel moves to the controversy in Chongqing, the company continues to deal with fallout over charges it sold about 140,000 pounds of pork the past two years that was mislabeled a more expensive organic variety. The added cost to consumers amounted to about $115,000, according to the city government’s website.

Chinese inflation remains high amid signs of economic slowdown

Inflation in China moderated in September for the second consecutive month, but still remained stubbornly high amid growing signs of a global slowdown.

China’s consumer price index, the main gauge of inflation, grew 6.1% from a year earlier, down slightly from a 6.2% rise in August.

The index remains far above the 4% annual target set by the central government, making it difficult to loosen monetary policy if China’s economy is pulled into a global decline.

There’s evidence that the world’s second-largest economy may be slowing down.

Trade data released Thursday showed Chinese exports decreased in September over slackening European demand and a strengthening yuan, the country’s currency.

Prices for crude oil and copper fell on news of the data, reflecting jitteriness in China’s ability to import commodities as voraciously as it has in the past.

Meanwhile, thousands of small businesses in China’s coastal provinces are reportedly being squeezed by the country’s credit crunch. China’s State Council said it would support the small firms by increasing loans and offering tax breaks.

But central leaders say reining in inflation remains an overall priority –- dulling expectations that policymakers will loosen credit, drop interest rates or lift buying restrictions in China’s stagnant residential property market.

“For the moment, we remain in policy stasis -– no more tightening, but no real loosening -– while Chinese authorities nervously eye developments in the Eurozone,” said Alistair Thornton, an analyst for IHS Global Insight in Beijing. “It is the Eurozone and U.S. that form the greatest downside risk for China’s outlook.”

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-- David Pierson  

Twitter.com/dhpierson

Photo: Customers look at prices for vegetables at a supermarket in Hefei, China. Credit: Reuters

California winemakers hail South Korean trade agreement

California grape growers and vintners are excited about ratification by Congress of a free-trade agreement with South Korea.

The treaty calls for the immediate removal of a 15% Korean tariff on California wine and 45% import duty on grape juice concentrate. Korean excise, value-added and other taxes on California wines also will be lowered, making the products more attractive and affordable to Korean consumers.

California accounts for 90% of all U.S. wine exports to South Korea, which totaled 500,000 cases worth $11.2 million last year.

Korea has a significant wine-drinking culture, with import consumption growing 177% in the last decade, said Robert P. "Bobby" Koch, president of the Wine Institute, a trade group based in San Francisco.

California long had been the second biggest exporter of wine to Korea, behind France. However, Chile surpassed the Golden State in 2005 after the South American nation signed a trade agreement with Korea that sharply lowered import duties. The European Union signed its own treaty with Korea, which became effective on July 1, boosting the likelihood of increased wine sales.

The U.S. action Wednesday is expected to make California wines more competitive in the growing Korean market.

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-- Marc Lifsher

Photo: Foley Winery in Santa Ynez Valley. Credit: David Langford / Associated Press

Wall Street: Stocks down, gold up on mixed data

Gold: Trading now at $1,649 an ounce, up 1.6% from Friday. Dow Jones industrial average: Trading now at 10,829.38, down 0.8% from Friday.

Mixed results. Stocks have been bouncing around this morning on good news about the U.S. economy but worrying signs out of Europe.

Protest prime time. As the Wall Street protests spread across the country to Los Angeles, the 700 arrests this weekend in New York are helping the movement's cause.

Off with their heads. Roseanne Barr calls for a return of the guillotine, for use on bankers.

Inside the Koch empire. Bloomberg has a lengthy investigative take-down of the secretive company run by the Koch brothers, detailing a number of alleged instances in which the firm broke the law.

Merrill vs. Countrywide. Merrill Lynch, the Wall Street firm acquired by Bank of America, is doing okay these days but it is being dragged down by BofA's other recent acquisition, Countrywide, and employees are not happy.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Consumer Confidential: Nominee to head new agency on hot seat

Here's your to-infinity-and-beyond Tuesday roundup of consumer news from around the Web:

--He may not be Elizabeth Warren, but President Obama's nominee to head the new Consumer Financial Protection Bureau is promising to play ball with Congress and not be too rough with banks. Even so, Richard Cordray's chances of winning Senate approval to lead the agency remained uncertain. Republicans have promised to block any nominee to head the agency unless the bureau is changed in ways they say will make it more accountable. Democrats say those changes would weaken its powers. In remarks prepared for his confirmation hearing Tuesday with the Senate Banking Committee, Cordray said his experience as former Ohio attorney general taught him that litigation can be slow, costly and unnecessarily acrimonious. He said he would use lawsuits "judiciously," and noted that the bureau has other powers to resolve problems, including issuing rules, writing reports and examining large banks and many nonbank institutions.

--The problem with China is that the country just isn't caffeinated enough. Luckily, Starbucks is stepping up to remedy that situation. The company plans to triple its coffee shops in China during the next four years and step up expansion elsewhere in Asia. Starbucks plans to operate 1,500 outlets in China by 2015 from a current 470, according to the company's Asia Pacific president, Jinlong Wang. The company also expects to open 700 coffee shops in South Korea by 2016, up from 370 now, Wang said. "The coffee industry in China has huge potential," Wang told reporters in Singapore. "China has 5,000 years as a tea-drinking country, but we've created a new coffee culture." Starbucks said in July that revenue from its international business rose 20% in the April-June quarter from a year earlier and accounted for 23% of overall sales of $2.93 billion.

-- David Lazarus

 

Stocks fall in eurozone as U.S. jobs report adds to investor worries

On Monday, Asia's stock market took a tumble, and markets in the European Union followed suit with falls of their own.

The reason for the beating taken by the foreign markets centered largely on fears that the U.S. is sliding back into a recession after a Friday report that the nation added no new jobs in August and kept its unemployment steady 9.1%. Another factor is worry over the ongoing European debt crisis, according to a report from the Associated Press.

Reactionary market declines could be seen across Europe on Labor Day as the U.S. stock market was closed. Germany's DAX index fell 5.28%, France's CAC 40 fell 4.73%, the FTSE 100 in London fell 3.58%, and the Euro Stoxx 50 fell 5.11%.

Retail sales across the 17-nation eurozone saw a surprise increase in July, but a report on the E.U.'s services sector released Monday revealed a slowdown across Europe for the fifth consecutive month, the AP said.

"The purchasing managers' index for the eurozone showed the services sector was still growing -- unlike the manufacturing sector -- but only barely," the AP said. "That will add pressure on the European Central Bank to keep interest rates on hold when it meets this week."

The souring economic situations in Asia, Europe and the U.S. are leaving investors with "so much uncertainty, so much fear, that investors don't know what to do," David Kotok, chairman and chief investment officer at Cumberland Advisors, told the AP. "I don't remember the last time stocks were so cheap and nobody wanted them."

More evidence of investor worries were evident as well.

"The difference in interest rates between the Greek and benchmark German 10-year bonds, known as the spread, spiraled to new records on Monday, topping 17.3 percentage points," the AP said. "Yields on the Greek bonds were above 18%."

President Obama is set to give a major speech Thursday night in which he is expected to lay out proposals seeking to spark job creation. Obama previewed his speech in Detroit on Monday, saying the Republican Party will be publicly held accountable if its members don't support his job-creation plans.

From Monday's slumps in Asia and Europe, it's clear that investors on those continents will be watching to see whether Obama and U.S. lawmakers can turn the tide and stave off another recession.

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-- Nathan Olivarez-Giles

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Photo: Traders in Frankfurt, Germany. Credit: Michael Probst / Associated Press

Asian shares tumble on grim U.S. jobs report

Asian shares suffered heavy losses Monday on the first day of trading after last week's bleak U.S. jobs report intensified fears of a global recession.

Japan's Nikkei 225 index was down 1.8%, Hong Kong's Hang Seng index lost about 3% and South Korea's Kospi nosedived 4.4%.

China's benchmark stock index slumped 2% to close at a 13-month low on fears the government would continue to tighten monetary policy.

Chinese Premier Wen Jiabao said last week that stabilizing consumer prices is the government's chief priority.

At a press conference in Beijing Monday, World Bank President Robert Zoellick said inflation remains China's biggest short-term risk.

The former U.S. Deputy Secretary of State was meeting Chinese leaders in preparation of a joint report to be released later this year outlining steps China needs to take to rebalance its economy away from exports and investment toward domestic consumption.

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--David Pierson

Photo: A South Korean currency trader covers his face with his hands in front of screens Monday. Credit: Ahn Young-joon / AP.

Consumer Confidential: Spending, Banana Republic, Apple TV

Here's your hey-Mickey Monday roundup of consumer news from around the Web:

--We're shopping. Maybe not a whole lot, but we are shopping. Consumer spending rebounded in July as people bought more cars and other long-lasting items. Spending was up 0.8% over the month, the strongest increase in five months, following a revised 0.1% fall in June, according to the Commerce Department. July's boost was stronger than the 0.5% rise economists had expected. Adjusted for inflation, spending rose 0.5%. Consumption is a critical driver of U.S. economic growth, accounting for about two-thirds of gross domestic product, so July's rebound strikes a positive note for the beleaguered recovery -- that is, if we keep shopping through the second half of the year.

--How do you say "Banana Republic" in French? Gap Inc. plans to open its first Banana Republic store in France in early December. The clothing company, whose other brands include Old Navy and its namesake, says the store will be in Paris on the chic Avenue des Champs Elysees. Gap says the store is part of its international growth strategy. "With loyal customers across Europe, both in our stores and online, we are confident that Banana Republic's proposition of affordable luxury will resonate well with Parisian customers," said Stephen Sunnucks, president of Gap's international division. Last week, Gap also announced that it plans to open stores in Vietnam and Guam. Do they wear khakis in Guam?

--Is there an Apple TV in your future? The website VentureBeat reports that "Apple is almost certainly working on a digital television based on its iOS operating system, according to multiple sources in Silicon Valley." An Apple TV would allow people to do many things with their televisions they can't do now. The most important of these would probably be the ability to run Apple apps. This would permit consumers to download applications from Apple's store, which has hundreds of thousands of products. The Apple TV would allow people to switch from Facebook to Google to their calendars all on one device in the living room. The big question for me: Will you have to touch the screen to change channels?

-- David Lazarus

Photo: Gap Inc. says it will open a Banana Republic store in Paris. Credit: Jae C. Hong / Associated Press

Asian shares join global slide in early trading

Asian stocks fell in early trading Friday after steep losses in European and U.S. markets over intensifying debt concerns and poor economic data.

Japan's Nikkei 225 index fell 2.1% shortly after opening, South Korea's Kospi was off 4% and Australia's SP/ASX 200 dropped 2.6%.

Analysts said Asian investors were concerned about U.S. data that showed declining home resales and business activity.

"Investors have been spooked by these data. They are now focusing on next week's data such as U.S. GDP," Yumi Nishimura, a senior market analyst at Daiwa Securities, told Reuters. "Retail investors may buy defensive stocks on dips, but such buying may not have an impact on the overall index."  

-- David Pierson

Photo: Foreign currency dealers talk at the Korea Exchange Bank in Seoul on Monday. Credit: Truth Leem / Reuters

Asian markets close day of mixed trading

Trading was mixed in Asian markets Thursday as investors remained jittery over the European debt crisis and faltering global economy.

Japan's Nikkei 225 stock average fell 0.6% to 8,981.84 on a day of wild swings for the yen. Hong Kong's Hang Seng index declined 1% to 19,595.14, Taiwan's Taiex lost 0.2% to 7,719.09 and Australia's S&P/ASX 200 index ended down 0.5% to 4,140.8.

Advancing were China's Shanghai Composite Index, which gained 1.3% to 2,581.51, and South Korea's Kospi, which rose 0.6% to 1,817.44, the second day of gains after the country's Financial Services Commission banned short selling.

The regulating agency's chairman said on a radio program Thursday that South Korea would fare better than it did in the 2008 financial crisis if another global recession were to arise, Reuters reported.

--David Pierson

Photo: Pedestrians are reflected on a display board showing the current Nikkei share average in Tokyo. Credit: Kim Kyung-Hoon / Reuters

 

Asian stocks dive in early trading

Asian stocks joined the global sell-off in early trading Thursday, mirroring the renewed panic on Wall Street a day earlier.

Within about 20 minutes of opening, Japan's Nikkei 225 stock average sank 1.6%, South Korea's Kospi index fell 2% and New Zealand's NZX-50 was down 0.7%.

Asian shares saw major gains Tuesday but appear just as concerned about Europe's debt crisis that rattled U.S. markets hours earlier.  

Photo: Foreign currency dealers talk at the Korea Exchange Bank in Seoul on Monday. Credit: Truth Leem / Reuters

Stocks plummet again on European fears

U.S. stocks plummeted anew on Wednesday as fresh concerns about the European debt crisis and the dimming prospects for the global economy overwhelmed the brief euphoria that had carried stocks higher a day earlier.

In another dramatically volatile session, the Dow Jones industrial average sank 519.83 points, or 4.6%, to 10,719.94.

Though the market was down all day, the selling intensified in the final two hours, and the Dow closed at its low of the day, an ominous sign that reflected traders' unwillingness to hold stocks overnight.

A day after stocks were buoyed by the Federal Reserve's vow to keep interest rates low for at least two more years, investors grew nervous about the financial wherewithal of European banks and the outlook for the sovereign debt of Italy and Spain.

The Dow, which had surged 429 points, or 4%, on Tuesday, sank at the outset on Wednesday and remained deeply in the red the entire session.

"You're seeing people taking profits quickly in this environment," said Ryan Larson, head trader at RBC Global Asset Management in Chicago. "You've got to take what you're going to get fast, because otherwise you'll miss it."

The Standard & Poor's 500 index slumped 51.77 points, or 4.4%, to 1,120.76. The Nasdaq composite index slid 101.47 points, or 4.1%, to 2,381.05.

Europe's worsening debt crisis hammered financial stocks in France, Germany and Italy, taking the heaviest toll on French banks on rumors that France might lose its AAA credit rating.

"Markets are testing different possibilities, and one of them now is France,"’ said Kai Carstensen, economics analyst at the Institute for Economic Research in Munich, Germany. "The French deficit is still too high. Their consolidation plans and austerity measures are not perceived as sufficient, and people don't believe France will adhere to its own rules."

Although all three major ratings firms affirmed France's AAA rating, the French stock market dived 5.4%. German shares slumped 5.1% and the Italian market plummeted 6.6%.

Analysts said investors also were spooked by the Federal Reserve's grim reassessment on Tuesday of the U.S. economy's growth prospects. The Fed said it was likely to keep short-term interest rates near zero through mid-2013, but that intensified some investors' doubts about the economy's prospects.

Investors continued to pour into U.S. Treasury bonds for safety, and to lock in yields. The five-year T-note yield slid to 0.91% from 1.00% on Tuesday.

Money also piled into gold again. Gold futures in New York jumped $41.30 to a record $1,781.30 an ounce.

-- Walter Hamilton, Tom Petruno and Edmund Sanders

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Treasury sells 10-year notes at record low yield as buyers pour in

The continuing global stock market panic is the gift that keeps on giving to the U.S. Treasury.

Despite the U.S. credit-rating downgrade by Standard & Poor's last week, the Treasury on Wednesday saw huge demand when it sold $24 billion in new 10-year notes.

The notes sold at a yield of 2.14%, a record low for any 10-year auction. The yield on the previously issued 10-year note (charted at left) fell to 2.16% from 2.26% on Tuesday.

With stocks worldwide in another free fall, and worries soaring again about Europe's debt crisis, money keeps pouring into Treasuries as a haven. Many investors clearly don't care, at this point, that S&P rates U.S. bonds AA+ instead of AAA.

Market yields slid again Wednesday on Treasuries across the board. The five-year T-note fell to 0.92% from 1.00% on Tuesday. The 30-year T-bond fell to 3.54% from 3.62%.

Demand for longer-term bonds was stoked in part by the Federal Reserve's grim assessment of the economy, issued Tuesday, and policymakers' indication that they expected to keep short-term interest rates near zero for at least two more years.

That's encouraging investors to lock in longer-term yields.

The Treasury will wrap up this week's debt sales with an auction of $16 billion in 30-year bonds on Thursday.

-- Tom Petruno

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Asian markets recover after early losses

Asian stocks rebounded after a volatile day of trading Tuesday that sent markets nosediving in the morning before clawing back to more stable territory.

Japan's Nikkei 225 stock average closed down 1.7% to 8,944.48 after losing more then 4% earlier in the day and briefly reaching its lowest level since March 15, the aftermath of the nation's devastating earthquake and tsunami.

Mitsubishi UFJ Financial Group fell 3.2% and Canon, the world's largest camera maker, slid 1.9%. Inpex Corp., Japan's biggest oil exploration company lost 5.5% in response to falling oil prices, which dropped to $78 a barrel amid a dumping of commodities.

Trading swung even more wildly on Australia's S&P/ASX200 which hit a two-year low in the morning before turning around at noon to end the day at a gain of 1.2% to 4,034.80.

Analysts told the Australian Associated Press that investors returned to buying after China's consumer price index data showed non-food inflation declining, delaying the prospects of another interest rate hike in Beijing. Australia is a major supplier of commodities to China.

South Korea's Kospi fell by as much as 10% only to recover for a loss of 3.6% to 1,801.35 at its closing. The index, which was battered by fleeing foreign investors, was being bolstered later in the day by public institutions and pension funds, the Wall Street Journal reported.

Hong Kong's Hang Seng was trading down 1.9% by late afternoon, a significant improvement from the morning when investors were spooked by China's inflation report showing year-on-year consumer price growth at a 37-month high.

--David Pierson

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Photo: A woman is reflected on an electronic stock indicator in Tokyo. Credit: Shizuo Kambayashi / Associated Press.

Asian stocks hit hard in early trading

Stocks in Tokyo were battered in early trading Tuesday, joining the rout in New York and other global markets.

An hour after opening, the Nikkei 225 stock average was down nearly 4%, in what appears to continued panicked selling after Standard & Poor's downgraded the United States' credit rating Friday.

The dive brought the index close to its lowest level of the year, which was set March 15 after the country's devastating earthquake and tsunami.

Other Asian markets also fared poorly in morning activity. South Korea's Kospi continued its free fall by plunging as much as 5%, triggering a brief halt to trading for the second day in a row.

South Korean Finance Minister Bahk Jae-wan called for a global response at a policy meeting Tuesday morning, the Wall Street Journal reported.

"No individual country can adequately respond to this financial market shock on its own," Bahk said. "Given our nature as a small and open economy, we need to strengthen policy collaboration with other countries."

Australia's S&P/ASX200 was down 5.4% in early trading.

-- David Pierson

Photo: Foreign currency dealers talk at the Korea Exchange Bank in Seoul on Monday. Credit: Truth Leem / Reuters

Asian stocks plunge on first day of trading after U.S. downgrade

Asian shares plummeted Monday on the first day of trading after an unprecedented downgrading of U.S. government credit last week, raising fears the global economy was heading for deeper trouble.

In what could be a preview of U.S. markets, Hong Kong's Hang Seng fell 2.3% to 20,464.03, Japan's Nikkei 225 stock average dropped 2.2% to 9,097.56 and the Shanghai Composite Index lost 3.8% to end at 2526.82.

  “From how fast the market is falling I can see people are really scared,” said Chen Wenzhao, an analyst for China Merchant Securities in Shanghai. “In the short term, it may be really hard for people to overcome their worries.”

The steep losses came even after global policy makers said efforts would be made to restore confidence in financial markets.

Trading on South Korea’s Kospi was briefly halted after it nosedived by as much as 7.4% in the afternoon. The index ended the day down 3.8% to 1,869.45.

“We’re seeing real panic selling now,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $29 billion, told Bloomberg. “Concerns about global economic conditions are affecting Asian markets overall. Korea, which has relatively more liquidity, is feeling a harder pinch.”

Indonesian President Susilo Bambang Yudhoyono said he would hold an emergency meeting with his cabinet after stocks in his country fell about 5%, Reuters reported.

In other Asian markets, Taiwan’s Taiex slumped 3.8% to 7,552.80, Australia's S&P/ASX 200 index dropped 2.9% to 3,986.10 and Singapore's Straits Times Index fell 2.9% by later afternoon.

--David Pierson

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Photo: An investor in front of a stock price board at a brokerage in Shanghai earlier this year. Credit: Eugene Hoshiko / Associated Press

No rush from U.S. Treasuries, as yields fall while Asian stocks slump

U.S. Treasury bonds' status as a haven seemed intact in Asia on Monday, as yields fell despite Standard & Poor's downgrading of Uncle Sam's credit rating on Friday.

It may have helped Treasuries that Asian stocks were broadly lower, as some investors bailed out ahead of European and U.S. equity trading.

The 10-year Treasury note yield slid to 2.50% in late Asian trading, down from 2.56% on Friday.

Shorter-term yields also fell. The two-year T-note dropped to a record low 0.26% from 0.29%.

Over the weekend, analysts had been uncertain as to how global investors would react to S&P’s move late Friday to lower the U.S. government’s credit rating to AA+ from AAA -- the first time in history that America has lost its top-rung rating.

S&P cited concerns about the nation’s growing debt load and uncertainty about Washington’s willingness to rein-in borrowing.

Many on Wall Street argued that investors were unlikely to flee Treasuries, because even with the one-notch downgrade there still is no significant risk that the U.S. would be unable to pay its bills.

What’s more, with the global economic recovery fading and stock markets stumbling, many investors seemed likely to continue to turn to Treasuries as a place to hide.

In Asian trading, Treasury yields fell as stock markets’ losses worsened Monday. Japan’s Nikkei-225 index was down 2.1% late in the day’s session after tumbling 5.4% last week.

Australian’s main market index was off 2.5% after slumping 7.2% last week.

In China, the Shanghai composite index was down 3.7%. Taiwan’s main index, which plummeted 9.2% last week, was off 3.6%.

For updated Asian market indexes, go here.

-- Tom Petruno

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Photo: A trader walks by the stock price board at the Malaysian stock exchange in Kuala Lumpur. Credit: Mohd Rasfan / AFP / Getty Images