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10-year US bond yield slumps below 1.5%

The benchmark 10-year yield was down 6.9 basis points in morning trade at 1.4561%.

Reuters|
Last Updated: Feb 21, 2020, 08.54 PM IST
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US stock indexes opened lower on Friday as investors scrambled for safer assets such as gold and government bonds.
BOSTON, Feb 21 (Reuters) - U.S. Treasury yields were down on Friday as mounting concerns about the economic impact of the coronavirus epidemic drove investors into safe-haven assets.

The benchmark 10-year yield was down 6.9 basis points in morning trade at 1.4561%.

It was the first time the note yielded less than 1.5% since early September. Analysts said the breach of the barrier showed investors' growing concern as cases of the virus mount beyond China, including in South Korea and Japan.

"Everybody is trying to figure out how bad this will be," said Jon Hill, U.S. rates strategist for BMO Capital Markets. He noted how the move below 1.5% first occurred during European trading hours and corresponded with negative coronavirus news, indicating traders were focused on the epidemic rather than economic data.

Yields took another step down after a survey of purchasing managers on Friday morning showed U.S. business activity in both the manufacturing and services sectors stalled in February as companies grew increasingly concerned about the coronavirus.

U.S. stock indexes opened lower on Friday as investors scrambled for safer assets such as gold and government bonds.

Traders moving away from riskier assets headed into the weekend also likely also drove down yields, as they have in previous Friday sessions, Hill said.

Beijing reported an uptick in cases of coronavirus on Friday and South Korea reported 100 new cases that doubled its infections.

In China authorities reported 234 infections among prisoners outside Hubei province, contributing to a jump in reported cases beyond the epicenter. The report ended 16 straight days of declines in new mainland cases excluding that province, where the virus first emerged in December in its now locked-down capital, Wuhan.

Although daily updates on the spread of the virus have kept investors on edge, hopes that central banks across the globe will take measures to counter any slowdown have cushioned global stocks and kept the benchmark S&P 500 near all-time highs.

A number of U.S. Federal Reserve officials are set to speak at a Friday conference. Speaking on CNBC, Atlanta Federal Reserve Bank President Raphael Bostic said the U.S. economy is set to grow at a 2.00% to 2.25% annualized rate this year and any disruption to activity from the coronavirus outbreak will be short-lived.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 5.3 basis points at 1.342% in morning trading.
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