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.
- "Even though interest rates are already low, there is room for them to fall further. U.S. 10-year Treasury yields are still significantly above those in Europe and Japan, which implies that rates could converge longer-term."
Why it matters: Yields on the benchmark 10-year note have fallen by more than 90 basis points in just over two months in 2020, as bond market investors have priced in bad news all year.
- "We’ve had one external shock after another," Bernard Baumohl, chief global economist at the Economic Outlook Group, tells Axios, pointing to doubts about the phase one U.S.-China trade deal and the targeted killing of Iranian Gen. Qassem Soleimani that preceded the coronavirus outbreak.
The bottom line: While the U.S. stock market has vacillated erratically between scaling all-time highs and record sell-offs, the bond market has been consistently bearish on the state of the economy.