The global flight to public debt security continued on Friday as investors stacked up on US Treasuries and sent the 10-year note yield to record levels.
The 10-year Treasury benchmark return fell to an all-time low of 0.676% at 9.46 a.m.ET, extending its break below 0.7% for the first time, according to Tradeweb data. . The rate was last seen slightly higher at 0.723%.
At the lowest, the yield on the 30-year Treasury bond reached a new record of 1.259%; the 5-year yield fell to 0.532%; and the 2-year yield fell to 0.439%. Bond yields decline as their prices rise.
The drop in yields came in a stock drain, as global business disruption following the coronavirus epidemic heightened fears of a global slowdown. The latest figures on coronaviruses from the World Health Organization (WHO) indicate at least 95,270 cases of the virus worldwide and at least 3,280 deaths.
The anxiety came despite the first emergency of the US Federal Reserve, a reduction of 50 basis points since the financial crisis earlier this week and the fact that US lawmakers approved about $ 8 billion in emergency spending for fight disease.
“This is a brave new world of 0 handles and we have now taken 10-year returns in terms of basis points as a benchmark. 1.0%, thanks for the memories,” wrote Ian Lyngen, chief strategy officer rates at BMO Capital Markets.
“The” grand prize “continues, encouraged by falling stock prices and reports that coronavirus infections are approaching 100,000 worldwide,” he added. “The economic implications are still unknown at present, even if the logic that” the more the global closure continues, the deeper the impact “resonates among market players.”
Friday’s Dow Jones futures signaled another big sale on Wall Street. Pre-market trading involved falling the opening Dow Jones by more than 800 points, or more than 3%. On Thursday, the Dow Jones, the S&P 500 and the Nasdaq Composite all fell more than 3% and remain firmly in corrections, each down more than 10% from all-time highs.
Stocks and yields fell to lowest levels after the Department of Labor announced on Friday that American employers had created 273,000 jobs in February and that the unemployment rate had remained stable at 3.5%, the American companies continuing to hire despite the scruples of the virus.
Economists polled by Dow Jones were looking for 175,000 wage bill growth and 3.5% unemployment.
DoubleLine CEO Jeffrey Gundlach told CNBC on Thursday that he expects 10-year yields to be close to the bottom, but short-term rates will hit zero as growth concerns concerning the coronavirus persist.
“If we look at history, once the Fed has panicked, the drop in inter-meeting rates, especially when it is 50 basis points … they fell again pretty quickly,” said Gundlach. “I am in the camp that the Fed will further cut rates, maybe even in two weeks” at its regular meeting.
“We will see short rates moving towards zero,” he added.