Mar 4, 2020 - Economy & Business

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

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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.

  • "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.

Go deeper: Coronavirus fallout could be worse than the financial crisis

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Yield on U.S. 10-year bond breaks 1% for first time ever

Photo: Spencer Platt/Getty Images

The yield on the U.S. 10-year Treasury fell below 1% for the first time ever after the Fed unexpectedly cut rates to shield the economy from any coronavirus impact.

Why it matters: Yields on the benchmark 10-year note have fallen by more than 90 basis points in just the first two months or so of 2020. That's a huge move in a short amount of time — and reflects investors' appetite for safe-haven assets and pessimism about the global economy.

Go deeperArrowUpdated Mar 3, 2020 - Economy & Business

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.

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.