U.S. markets closed

10-Year Treasury Bond Yield Falls Below 1% For The First Time Ever

Dave Royse

The 10-year U.S. Treasury bond yield fell below 1% for the first time ever on Tuesday as investors continued to react to the spreading COVID-19 outbreak and the Federal Reserve made an emergency interest rate cut trying to stave off economic effects from the epidemic.

Flight To Bonds

With the cut in interest rates and growing fears of economic slowdown amid nervousness about the virus, rattling a volatile market in recent days, investors fled to bonds, sending yields down. Bond yields often fall when investors want to hedge against volatility or weakness in stocks.

Treasury bond yields were already trending lower but the yield on the benchmark 10-year note dropped more than 11 basis points on Tuesday to an all-time low of 0.927%. The yield on the 30-year note also hit a record low at 1.601%.

Stocks tumbled last week but had rebounded on Monday, only to sell off again on Tuesday.

Panic Buying?

“Right now, it’s just simply panic buying,” Donald Ellenberger, senior portfolio manager of Federated Investors told The Wall Street Journal, speaking of the flight to bonds.

The drop also was reflective of expectations for further interest rate cuts as treasury yields tend to track expectations for future interest rates.

The iShares Barclays 20+ Yr Treas.Bond ETF (NYSE: TLT) rose 1.5% to close at $156.33.

Related Links:

Federal Reserve Issues Emergency 0.5% Interest Rate Cut, Cites 'Evolving Risks' From Coronavirus

The Coronavirus Outbreak's Impact On Global Stocks, Commodities, ETFs

See more from Benzinga

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.