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Expand chart
Data: FactSet; Chart: Axios Visuals

Those who have bet on fear overtaking the market by piling into U.S. Treasury bonds have been rewarded handsomely so far in 2020, as prices on safe-haven government debt have risen and yields have fallen significantly.

Why it matters: The bond market is sending a clear signal that investors are nervous — tensions continue to ratchet higher in the Middle East, new wrinkles are revealed in President Trump's impeachment trial, and the coronavirus outbreak is claiming more lives.

Yields on the benchmark 10-year Treasury note hit a three-month low Wednesday and have fallen by 28 basis points since the beginning of the year.

  • The S&P 500 has seesawed for most of the month, and U.S. stock indexes have failed to gain much traction, despite strong earnings results from big banks and top tech companies.

By the numbers: Bond funds drew $16.1 billion worth of inflows for the week ending Jan. 22, the sixth largest total recorded since ICI began tracking flows.

  • Over the last three weeks, $57.75 billion has been moved into bond funds.

Background: The week ended Jan. 8 saw the largest inflows to bonds ever recorded and the following week, which ended Jan. 15, saw the fourth highest total on record.

  • Those two weeks combined set a record for bond inflows during a two-week period, according to Lipper data.

Remember, the stock market boomed and bond yields rose in the fourth quarter of 2019.

  • That was when the trade war looked to be calming, Brexit appeared settled, and the Fed papered over troubles in the systemically important repo market by injecting more than a trillion dollars of cash and adding $400 billion of assets to its balance sheet.

But geopolitical risks have again taken center stage, and the market has responded with long-dated Treasury yields dropping back toward historic lows.

Flashback: Fund managers at major firms like BlackRock, Bank of America, JPMorgan and others said in their 2020 outlooks that they expected stocks outside the U.S. to deliver stronger returns this year.

  • The yield on the 30-year bond has fallen to within 12 basis points of its all-time low.

What's happening: Big bets have been placed on foreign stocks, with positive inflows for global equity funds seen every week so far this year.

  • Conversely, domestic equities have seen outflows every week in 2020, ICI data show.

Yes, but: The inflows haven't translated to gains. MSCI's All-Country World Index excluding the U.S. has underperformed the S&P 500 by about 3 percentage points so far this year, according to FactSet data.

State of play: Chairman Jerome Powell announced during Wednesday's FOMC press conference that the Fed would continue the repo market injections and keep adding to its balance through April but would reduce the amount.

  • The stock market erased its gains for the day following those comments, with the S&P ending the day lower.

What's next: The World Health Organization will hold an emergency meeting today to discuss whether to declare a public health emergency of international concern due to the outbreak of the novel coronavirus, which has now killed at least 170 people and infected more than 7,800.

  • On the economic front, the Commerce Department will release the first estimate of U.S. fourth quarter GDP.

Go deeper: U.S. Treasury yield curve inverts again

Go deeper

The dark new reality in Congress

National Guard troops keep watch at security fencing. Photo: Kent Nishimura/Los Angeles Times via Getty Images

This is how bad things are for elected officials and others working in a post-insurrection Congress:

  • Rep. Norma Torres (D-Calif.) said she had a panic attack while grocery shopping back home.
  • Rep. Jim McGovern (D-Mass.) said police may also have to be at his constituent meetings.
  • Rep. Adam Kinzinger (R-Ill.) told a podcaster he brought a gun to his office on Capitol Hill on Jan. 6 because he anticipated trouble with the proceedings that day.
Off the Rails

Episode 3: Descent into madness

Photo illustration: Sarah Grillo/Axios. Photos: Tom Williams/CQ-Roll Call, Chip Somodevilla/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 3: The conspiracy goes too far. Trump's outside lawyers plot to seize voting machines and spin theories about communists, spies and computer software.

President Trump was sitting in the Oval Office one day in late November when a call came in from lawyer Sidney Powell. "Ugh, Sidney," he told the staff in the room before he picked up. "She's getting a little crazy, isn't she? She's really gotta tone it down. No one believes this stuff. It's just too much."

Convicts turn to D.C. fixers for Trump pardons

Trump confidante Matt Schlapp interviews Jared Kushner last February. Schlapp is seeking a pardon for a biotech executive. Photo: Samuel Corum/Getty Images

A flood of convicted criminals has retained lobbyists since November’s presidential election to press President Trump for pardons or commutations before he leaves office.

What we're hearing: Among them is Nickie Lum Davis, a Hawaii woman who pleaded guilty last year to abetting an illicit foreign lobbying campaign on behalf of fugitive Malaysian businessman Jho Low. Trump confidante Matt Schlapp also is seeking a pardon for a former biopharmaceutical executive convicted of fraud less than two months ago.