U.S. Treasury yields surged higher on Friday as the Dow Jones Industrial Average looked to recover from its biggest one-day drop since the stock-market crash of 1987.
Investors are also looking intently at what measures policymakers across the world will use to cushion the expected economic pain from the COVID-19 epidemic.
What are Treasurys doing?
The 10-year Treasury note yield
TMUBMUSD10Y, +15.39%
was up 7.9 basis points to 0.931%. The 2-year note rate
TMUBMUSD02Y, +13.76%
was up 3.7 basis points to 0.526%, while the 30-year bond yield
TMUBMUSD30Y, +8.07%
surged 20.1 basis points to 1.612%. Bond prices move in the opposite direction of yields.
What’s driving Treasurys?
Demand for haven assets fell as global stocks looked to stage a significant rebound on Friday. Futures for the S&P 500
SPX, -9.51%
and the Dow Jones Industrial Average
DJIA, -9.99%
showed U.S. equities were set for a much higher open on Friday, albeit after recording the steepest losses this week since the 2008 financial crisis.
Policymakers across Asia and Europe announced new measures to aimed at blunting the economic blow of the coronavirus. The People’s Back of China announced a cut to the amount of reserves that banks need to keep on hand, increasing room for financial institutions to lend to businesses.
The German government said it would deploy all its means to help German companies and workers deal with the impact of the coronavirus. German finance minister Olaf Scholz says a fiscal stimulus package may need to be deployed later this year.
In the U.S. House Speaker Nancy Pelosi says that she and the Trump administration are close to agreement on a coronavirus aid package to reassure anxious Americans by providing sick pay, free testing and other resources, hoping to calm teetering financial markets amid the mounting crisis.
In economic data, U.S. import prices fell 0.5% in February, partly due to lower fuel costs. The University of Michigan’s consumer sentiment survey for March is due at 10 a.m. ET. Economists polled by MarketWatch forecast a reading of 95.0.
What did market participants’ say?
“Watch for rapid sentiment changes today, possibly due to [University of Michigan] consumer survey or the sudden realization COVID-19 headlines could deteriorate further over the weekend. The rapid climb in cases and deaths becomes numbing, as it did in the Chinese reports, but the pandemic has the proven capability of setting nastier milestones,” said Jim Vogel, an interest-rate strategist at FHN Financial, in a note.
Source : MTV
