Mar 13, 2020 - Economy & Business

Quantitative easing's return sends bond yields soaring

Data: Investing.com; Chart: Axios Visuals

Longer-dated U.S. Treasury yields have bounced higher in recent days, with the benchmark 10-year note fully reversing course and rising to more than double its lowest level on Tuesday.

What's happening: The announcement of $1.5 trillion in repo injections on Thursday by the New York Fed followed two announcements about increasing the amount of cash it was injecting in its repo operations this week. The deluge has given yields a significant bounce.

  • Just this week the Fed has raised the amount of money it is pumping into the market daily from $100 billion to $150 billion and then to $175 billion, to go along with $45 billion in two-week operations and $60 billion in purchases for a "range of maturities."
  • "It looks like QE (quantitative easing)," Priya Misra, head of global rates strategy at TD Securities, told Reuters. "It is QE."

By the numbers: Yields on the 10-year Treasury note rose as high as 0.91% Thursday, 60 basis points higher than the low touched on Monday. Yields on the 30-year bond similarly jumped, touching a high of 1.50%, up 80 basis points from Monday's low of 0.70%.

  • Both Monday levels were record lows.

Go deeper: Record low U.S. Treasury yields are expected to keep falling

Go deeper

U.S. bond yields go negative again as investors seek coronavirus safety

Data: Investing.com; Chart: Axios Visuals

U.S. Treasury yields on one-, two- and three-month maturities all turned negative late Monday, as investors continued to favor short-term debt that functions like cash.

What it means: “What you are seeing today is an example of a flight-to-safety on a massive scale,” Kathy Jones, chief fixed-income strategist at Charles Schwab, told FT on Wednesday when yields first fell below zero.

Bond market returns to normalcy, traders ignore stock gains

Illustration: Rebecca Zisser/Axios

The Treasury market is getting back to normal after the Fed's massive bond-buying announcement earlier this week.

What to watch: Yields on Treasury bills were negative out to three months, closing in the red late Wednesday, as traders continued to favor paying to loan the government money over buying longer-dated bonds.

There Is No Alternative to Treasuries

Data: FactSet; Chart: Axios Visuals

The acronym TINA (There Is No Alternative) had long been used to explain why investors piled into U.S. equities, but it may now apply to U.S. Treasuries.

State of play: After Monday's sell-off, the S&P 500 has erased all of its gains dating back a year, and the dollar, emerging market equities and oil are all negative during that period.