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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

Educators face fines, harassment over critical race theory

People talk before the start of a rally against critical race theory being taught in schools at the Loudoun County Government center in Leesburg, Va. Photo: Andrew Caballero-Reynolds/AFP via Getty Images

Elementary school teachers, administrators and college professors are facing fines, physical threats, and fear of firing because of an organized push from the right to remove classroom discussions of systemic racism.

Why it matters: Moves to ban critical race theory are raising free speech concerns amid an absence of consistent parameters about what teachings are in or out of bounds.

Updated 7 hours ago - Politics & Policy

1 dead after pickup truck hits Pride spectators in Florida

Police investigate the scene where a pickup truck drove into a crowd of people at a Pride parade in Wilton Manors, Florida, on Saturday. Photo: Jason Koerner/Getty Images

A driver in a pickup truck hit spectators at a Pride festival in Wilton Manors, Florida, killing a man and leaving another person hospitalized Saturday, authorities said.

Details: Fort Lauderdale Mayor Dean Trantalis told reporters police had "apprehended the driver" and that the vehicle missed a parade car carrying Rep. Debbie Wasserman Schultz (D-Fla.) "by inches."

Updated 9 hours ago - Sports

Uganda Olympic team member tests positive for COVID in Tokyo

The Uganda National boxing team's Catherine Nanziri (L) and others arrive for check-in at Entebbe international airport in Wakiso, Uganda on Friday, ahead of their departure to participate in the Tokyo Olympic Games. Photo: Badru Katumba/AFP via Getty Images

A Uganda Olympic team member tested positive for COVID-19 upon arrival in Japan late Saturday, officials said.

Why it matters: Japan's government has faced criticism for vowing to host the Tokyo Games next month as coronavirus cases rise. The Ugandan team is the second to arrive in Japan after the Australian women's softball players, and this is the first COVID-19 infection detected among the Olympic athletes, Al Jazeera notes.