10-Year Treasury Yield Dipped to All-Time Low as Virus Spreads

 

The 10-year Treasury touched all-time lows yesterday amid virus concerns. The CDC published a report urging US citizens to prepare for the eventual outbreak of the coronavirus in the United States, sending the 10-year yield tumbling as low as 1.305% as investors flocked to haven assets. The Dow Jones Industrial Average and S&P 500 each falling over 3% on the day. Despite the volatility, the head of the IMF warned countries not to overreact to the threats. US Fed Vice Chair Richard Clarida echoed that statement yesterday, saying that while disruptions could affect the US economy, “it is still too soon to even speculate about either the size or the persistence of these effects.” Rates rebounded higher on those remarks, the 10 year yield ultimately climbing to 1.35% to end the day.

 

 

China is taking steps toward implementing a partial trade deal with the US. US officials reported this week that China lifted import restrictions on certain goods like poultry and pet food, which were all part of the phase-one deal signed earlier this year. The deal also calls for China to purchase $32 billion of US agricultural products over the next 2 years. With the coronavirus impact on its economy still unknown, the likelihood of the China’s purchases staying on pace has lowered.

 

 

Day ahead. ECB President Christina Lagarde spoke in Germany this morning, calling for euro zone governments to boost growth. US new home sales numbers will be released with economists forecasting an increase of 17,000 from the previous month to 711,000. Dallas Fed President Robert Kaplan and Minneapolis Fed President Neel Kashkari will both speak today.