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Yields Fall on New Coronavirus Concerns, 10-Year Touches New Record Low

Yields Fall on New Coronavirus Concerns, 10-Year Touches New Record Low

Wednesday, 26 February 2020 03:37 PM

U.S. bonds steadied on Wednesday after a volatile trading session that saw the benchmark 10-year Treasury yield hit a record low for a second consecutive day, as investors focused on the economic risks of the spreading coronavirus epidemic.

The 10-year yield was up less than a basis point at 1.3354% in late afternoon trading, after reaching as high as 1.3821% earlier and touching an all-time low of 1.3005%.

Two of the three major U.S. stock indexes closed lower on concerns about the virus' possible spread in the United States and the rest of the world.

Officials in Nassau County, the Long Island suburbs of New York City, said they were monitoring 83 people who had visited China and may have come in contact with the coronavirus. Governor Andrew Cuomo said the state has had no confirmed cases so far.

"There's a lot of concern out there," said Cantor Fitzgerald Treasury analyst Justin Lederer.

"When there is uncertainty in the world and concerns about growth, money goes right to safe havens and Treasuries are a clear benefactor of this," he said. Even the higher yields were not a main reason for buying, said Jim Barnes, director of fixed income at Bryn Mawr Trust. "I wouldn't say these yields are attractive; it's more a place to park cash," he said.

U.S. President Donald Trump was to hold a news conference on the coronavirus outbreak at 6:30 p.m. EST Wednesday, the White House said.

U.S. health authorities, managing 59 cases so far - mostly Americans repatriated from a cruise ship in Japan - have said a global pandemic is likely.

New Commerce Department data on Wednesday showed sales of new U.S. single-family homes raced to a 12-1/2-year high in January, indicating housing market strength that could help blunt any hit to the economy from the coronavirus and keep the longest economic expansion in history on track.

On Wednesday the U.S. Treasury Department said it accepted $41 billion in bids for five-year notes out of $100.7 billion worth of public bids tendered, at a high yield of 1.15%. Primary dealers accounted for 28.7% of competitive bids accepted, somewhat higher than the 23.4% average, according to a research note from BMO Capital Markets.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 2.8 basis points at 1.1627% in afternoon trading.

© 2020 Thomson/Reuters. All rights reserved.

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U.S. bonds rallied on Wednesday, pushing the benchmark 10-year Treasury yield to a record low for the second consecutive day, as traders adjusted portfolios against risks the spreading coronavirus epidemic would have a significant economic impact.
bond, yields, treasuries, low, virus
Wednesday, 26 February 2020 03:37 PM
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