10-year Treasury yield rises to 0.7% as volatile first quarter ends

U.S. government debt yields rose Tuesday as investors prepared for the end of one of the most volatile quarters in recent memory thanks to the spread of the novel coronavirus.

The yield on the 10-year note rose above 0.7% around 8:20 a.m. ET, while the yield on the 30-year Treasury bond climbed to 1.34%. Bond yields rise as their prices fall.

Despite the relative tame moves in the Treasury market Tuesday morning, U.S. debt traded at historic levels over the last three months as COVID-19, and efforts to contain its spread, convinced many investors that the U.S. economy is headed for recession.

That fear at some point sent traders fleeing for the safety of government debt and away from riskier assets like stocks, at one point pushing the 10-year rate to a record low at 0.318%.

The U.S. death toll from the coronavirus passed 3,000 on Monday following the deadliest day yet, while more than 164,000 cases have now been confirmed. Having deployed a massive $2 trillion stimulus package just last week to cushion the economic blow from the pandemic, Congress is now looking at additional steps that may be taken to manage the mounting human impact.

“The final day of the Q1 is upon us; and what quarter it has been,” wrote Ian Lyngen, head of rates strategy at BMO Capital Markets. “A quick recap: record low Treasury yields, a proactive Fed dropping rates to the effective lower bound (inter-meeting no less), reintroduction of QE in size, 35% selloff in equities, collapse of the energy complex, pandemic of unknown proportions, worldwide shutdowns bringing economic activity to an effective standstill, fiscal stimulus efforts measured in trillions, liquidity strains in many of the most liquid markets, and expectations for a catastrophic decline in domestic real GDP.”

U.S. stocks rebounded Monday from a deep sell-off triggered by economic uncertainty, with nationwide business closures and social distancing guidance extended until April 30.

On the data front, Redbook figures for last week are due at 8:55 a.m. ET before January’s S&P/Case-Shiller home price readings at 9 a.m. ET. CB consumer confidence data is due at 10 a.m. ET and it is expected to fall sharply.

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