The yield on the benchmark 10-year Treasury note dropped 8.4 basis points to 2.822% and the yield on the 30-year Treasury bond moved 5 basis points lower to 2.894%
U.S. Treasury yields slumped on Monday morning, as fears of a potential slowdown in global economic growth loomed.
The yield on the benchmark 10-year Treasury note dropped 8.4 basis points to 2.822% by around 8:10 pm GMT. The yield on the 30-year Treasury bond moved 5 basis points lower to 2.894%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
Treasury yields moved sharply lower on Monday morning, after having spiked at the end of last week.
Concerns about a Covid breakout in China marked the latest catalyst, with Asian stock markets cratering on fears about a slowdown in the region because of lockdowns.
This week, we start with China bringing in additional growth concern, Mohamed El-Erian, Allianz chief economic advisor, told CNBC’s ‘Squawk Box’ on Tuesday. We are now having both growth and inflation concerns and that’s why you’re seeing not just the moves in the equity market, but you’re seeing some peculiar moves in the bond market.
Market participants continued to digest the latest Federal Reserve updates, with some worried the central bank’s move to aggressively tighten monetary policy to address inflation could contract economic growth.
Fed Chairman Jerome Powell said Thursday that a 50-basis-point interest rate hike was ‘on the table’ for the Fed May policy meeting.
The 5-year Treasury yield then topped 3% on Friday, surging above the interest rate on the 30-year government bond. This is also known as a ‘yield curve inversion’ and indicates a lack of investor confidence about the economy, given they are selling out of shorter-dated debt in favour of long-dated bonds.
The 5-year yield slid more than 9 basis points to 2.856% on Monday.