Mar 24, 2020 - Economy & Business

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.

  • Short-dated Treasury bills are seen as more like cash because they are easier to trade than their longer-dated counterparts, Jones said, adding, “People are desperate for cash.”

The big picture: The U.S. is the first major economy in which government bond yields have turned negative before the country's central bank announced it would enact policy to push them below zero.

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

Go deeper

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

Data: FactSet; Chart: Andrew Witherspoon/Axios

The yield on the U.S. 10-year Treasury note fell below 1% for the first time ever after the Fed's unexpected rate cut.

The state of play: This drop might not be the end. "We expect Treasury yields to remain low and perhaps fall even lower," Charles Schwab chief fixed income strategist Kathy Jones wrote.

The coronavirus outbreak could finally sink the dollar

Data: FactSet; Chart: Axios Visuals

The dollar is buckling under the weight of expected rate cuts from the Fed and record-low U.S. Treasury yields.

The state of play: It has fallen to its weakest level when valued against a group of global currencies since the beginning of the year, and experts think there could be much further to go.

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.