Treasury yields fell on Friday, capping off a wild week for the bond market, as the coronavirus pandemic continues to keep investors on edge.
The yield on the benchmark 10-year Treasury note fell 11 basis points to about 1%%, while the yield on the 30-year Treasury bond dropped 13 basis points to 1.6%. Bond yields move inversely with prices.
“Treasury yields have reversed off their recent highs in yet another divergence with risk assets as stocks continued to climb overnight,” Ian Lyngen, BMO’s head of U.S. rates, said in a note on Friday. “Our expectations are low that the traditional risk on/off dynamic will return in the very near-term.”
The move in the bond market follows a raft of central bank measures to mitigate the economic impact of the coronavirus.
The European Central Bank, Bank of England and the Federal Reserve have all unveiled further monetary stimulus this week, as the coronavirus brings major economies to a halt.
The European Central Bank (ECB) late on Wednesday announced a new Pandemic Emergency Purchase Program that will deploy €750 billion ($819 billion) to purchase securities to help support the European economy.
The ECB’s move followed the Federal Reserve’s plans to pump an additional $1 trillion into the U.S. economy through asset purchases and cut the federal funds rate to zero. The Fed also said Wednesday night it will create a backstop for prime money market funds.
The Bank of England on Thursday announced additional action, including an interest rate cut and bond-buying program. The central bank slashed rates by 15 basis points to 0.1%, and said it will increase its holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion.
The global death toll from the coronavirus pandemic has risen above 10,000, according to data from Johns Hopkins University. On Thursday, Italy overtook China to be the world’s deadliest hotspot with 3,405 deaths registered. Meanwhile, California Gov. Gavin Newsom on Thursday issued a statewide order for all residents to ‘stay at home’ amid a coronavirus outbreak.
In terms of data, there will be existing home sales figures at 10 a.m. ET. There are no Treasury auctions scheduled.