Implied yield on U.S. 10-Year treasury futures trade below 1% amid virus concerns

by Jonathan Adams

Treasury futures jumped at the open of trading on Sunday night even as U.S. officials try to calm down concerns on coronavirus pandemic

The implied yield on U.S. 10-Year Treasury futures TYv1 traded below 1% for the first time, as investors grew increasingly unnerved by the spread of coronavirus.

Treasury futures jumped at the open of trading on Sunday night as investors took little solace from weekend comments by U.S. officials that aimed to soothe panic about a pandemic.

Stock futures opened lower. Stock markets plunged last week, with an index of global stocks setting its largest weekly fall since the 2008 financial crisis, and more than $5 trillion wiped off the value of stocks worldwide.

Money continued to pour into U.S. Treasuries as worries have increased about the global spread of the virus. At one point on Friday afternoon the 10-year yield reached 1.1159%, marking a record low for the fourth consecutive day, after comments by Federal Reserve Chair Jerome Powell cast doubt on whether the U.S. central bank would act quickly on rates. The movement also steepened the portion of the U.S. Treasury yield curve.

Treasuries are overbought but may stay low due to a slowdown but will spur a wave of refi’s and home sales, said John Lekas, CEO and Senior Portfolio Manager at Leader Capital.

Markets are now looking to central banks for aid in quelling the panic.

Goldman Sachs economists on Sunday predicted the U.S. Federal Reserve will cut interest rates aggressively and perhaps before its next scheduled meeting in two weeks’ time, saying the head of the U.S. central bank sent a clear signal with his unscheduled statement on Friday.

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