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Mueller’s probe finds no evidence of Trump collusion with Russia, Australia’s bond yield falls to an all-time low, and pressure intensifies on Theresa May as Brexit reaches original deadline. Here’s what’s moving markets. 

No Trump Collusion 

Special Counsel Robert Mueller found no evidence of collusion with Russia but failed to exonerate President Donald Trump on obstruction of justice even though Attorney General William Barr said he didn’t find enough evidence to pursue an obstruction charge. For his part, the President wasted no time in tweeting ``complete and Total EXONERATION’’ after Barr’s letter, and called the probe an ``illegal takedown that failed.”

Market Open 

Bonds yields remained under pressure at the start of the week on signs of slowing global growth, as Australia’s 10-year bond yield sank to an all-time low of 1.76 percent in early trading Monday, underscoring the return to globally low long-term rates. Treasuries soared Friday and the three-month/10-year yield curve inverted for the first time since 2007 in the U.S., while the yield on benchmark German Bunds dropped below zero. Asian equity futures are down after U.S. equities ended last week lower, when the yen and pound were the only G-10 currencies to advance against the dollar. This week, Brexit will continue to cast a shadow over the markets, which will keep alive risks for the pound and the euro. Meanwhile, U.S. officials return to Beijing for trade talks. In Asia, traders will await the outcome of Thailand’s first national elections in five years.  Several Federal Reserve policy makers will be speaking throughout the week, including Kansas City Fed President Esther George and St. Louis Fed President James Bullard. 

Bond Market’s Warning

Investors are about to absorb $131 billion of Treasury note auctions at the lowest yields in months, after they piled into U.S. debt following a dovish Federal Reserve decision and fresh signs that global growth is weakening. The week kicks off with a closely watched segment of the U.S. yield curve foreshadowing a recession: The gap between 3-month and 10-year rates is now negative. In the lead-up to the economic downturn that began late in 2007, this part of the curve initially flipped to inverted in early 2006. The curve’s latest collapse came amid reports showing weakness in France and Germany, while an index of American manufacturing slowed.

Thai Military Party Leads Election

A political party created by Thailand’s ruling military government was leading in the first election since a 2014 coup, putting junta chief Prayuth Chan-Ocha in position to return as prime minister. Palang Pracharath won 7.5 million votes with 92 percent counted, according to unofficial results posted on the Election Commission’s Facebook page. Pheu Thai, a political party linked to former premier Thaksin Shinawatra, came in second with 7.05 million votes. A win for the junta-backed party would amount to a breakthrough for Thailand’s royalist and military elites, who have repeatedly sought to prevent Thaksin and his allies from taking power over the past two decades.

Theresa May Gets Some Backing

Chancellor of the Exchequer Philip Hammond and other cabinet colleagues publicly backed Theresa May on Sunday as several British newspapers said the prime minister is under increasing pressure to stand down over her handling of Brexit, which reaches its original deadline to leave the European Union on March 29. Speaking on Sky News, Hammond said that removing the prime minister won’t help the U.K., and talk of a new leader is “self-indulgent.” Still, in comments that could harden splits in May’s cabinet, the chancellor refused to rule out holding a second referendum to help break the impasse over her Brexit deal, saying it was a “perfectly coherent proposition.” 

What We’ve Been Reading

This is what’s caught our eye over the weekend.

  • China’s central bank says nation still has a lot of opening to do. 
  • Turkey probes JPMorgan after lira slides.
  • Why China’s local government debt is the bomb that doesn’t explode. 
  • Uber said to seal $3.1 billion deal to buy Dubai-based Careem. 
  • Sinopec boosts spending to 2014 high as refining profit sinks. 
  • Inside the world’s most valuable startup. 
  • Amid a property boom employees may be slacking off. 

To contact the author of this story: Andreea Papuc in Sydney at apapuc1@bloomberg.net

To contact the editor responsible for this story: Adam Haigh at ahaigh1@bloomberg.net

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