10-year Treasury yield hits record low as coronavirus spreads beyond China

0
109


U.S. Treasury bonds rallied Wednesday as the accelerating spread of COVID-19 outside of China kept investors on edge and drove stocks lower for a fifth day.

What are Treasurys doing?

The 10-year Treasury note yield












TMUBMUSD10Y, -1.67%










 fell 1.8 basis points to 1.310%, after setting an intraday record of 1.302%, while the 30-year bond yield












TMUBMUSD30Y, -0.05%










 edged 0.7 basis point lower to 1.796%.

The 2-year note rate












TMUBMUSD02Y, -1.79%










 , sensitive to shifting expectations for monetary policy, tumbled 5.5 basis points to 1.145%.

The pronounced slide in short-dated yields could reflect growing expectations that the Federal Reserve will give in to market expectations for at least two quarter percentage point cuts in its policy interest rate this year.

What’s driving Treasurys?

Government bonds have rallied on worries that the COVID-19 virus could dampen the global economy’s momentum, as the number of confirmed cases outside of China shoots higher. German Health Minister Jens Spah said the largest economy in the eurozone was now looking at “the beginning of a coronavirus epidemic.”

There are now 81,245 confirmed cases of COVID-19 and at least 2,770 deaths, according to a tally of cases published by the Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering.

President Donald Trump will hold a news conference on the coronavirus at 6 p.m. Eastern.

See: The bond market will be reacting to coronavirus for months, this analysis finds

The S&P 500 index












SPX, -0.38%










 erased its early gains and closed lower for a fifth straight day.

An auction for 5-year Treasury notes in the afternoon saw lackluster demand, but the weak results were not enough to push yields higher. A similar result followed a sale of 2-year notes on Tuesday, suggesting that investors may be reluctant to buy meager-yielding bonds, even as many point to a need for liquid, safe assets.

In economic data, U.S. new home sales soared 7.9% in January to an annualized pace of 764,000, well above the consensus estimate of 722,000. Low mortgage rates have helped to lift home-buying activity.

What did market participants’ say?

“Positioning is not stretched too far to keep the bond market from continuing to rally,” Michael Lorizio, senior fixed income trader at Manulife Asset Management, told MarketWatch.

“Caution should be in order. Fear is most prevalently priced into the Treasurys market, and then secondarily in the equity market,” said Steven Oh, global head of credit and fixed income for PineBridge, in a MarketWatch interview.



Source : MTV