The Japanese yen continued to trade strong on early Thursday on the back of US Treasury bond yields inverting for the first time since 2007, giving more support to the safe haven appeal. At the time of writing, USD/JPY is trading at 105.86.

On Wednesday, for the first time in over 11 years, the yield on the 2-year US Treasury bonds traded higher than that of the 10-year US Treasury bonds, which is a sign that the US economy could be heading towards a recession. In the Asian session, the 10-year Treasury yields fell to their lowest levels in three years while the yield on the 30-year Treasury bonds declined below the 2% rate.

The increased risk of a recession has plummeted the market sentiment further and pushed up the demand for safe haven assets and currencies, including GOLD, JPY and CHF. Adding further pressure on the risk-off sentiment were disappointing economic data releases from China and Germany, which further cement the possibility of the global economy weakening.