March 9, 2020 / 9:36 AM / a month ago

TREASURIES-US Treasury yields hit new lows on coronavirus fears, oil plunge

 (Adds strategist comment, updates yields)
    NEW YORK, March 9 (Reuters) - U.S. 10-year Treasury yields
slid to a record low on Monday as coronavirus panic gripped
world markets and stoked fears that the world economy is headed
for a recession. 
    As global share markets tumbled, investors fled headlong to
bonds to hedge the economic trauma of the coronavirus, and oil
plunged more than 30% after Saudi Arabia opened the taps in a
price war with Russia.
    The U.S. 10-year Treasury yield fell to as low as 0.318%
. It was last down 27 basis points at 0.438%.
    Thirty-year Treasury yields were last down 35 basis points
on the day, having hit a new record low at 0.70% as
investors bet the Federal Reserve would be forced to cut
interest rates by at least 75 basis points at its March 18
meeting, despite having only just delivered an emergency easing
last week.  
    "There's an obvious panic-buying spree in place and, as with
every panic buying spree, there is no way to guess where it
stops," said Guy LeBas, chief fixed income strategist at Janney
Montgomery Scott in Philadelphia. 
    Consumer confidence in the economy has "gone from moderately
positive to disastrously negative in an extremely short period,"
he added.
    Still, with savings rates high and corporate balance sheets
healthy, if there is an economic downturn it will not be
particularly deep or long lived, according to LeBas.
    Two-year note yields tumbled to 0.251%, their
lowest since October 2014. They have fallen for 13 straight
sessions. 
    As two-year U.S. note yields neared 0%, shorter-dated yields
on British gilts turned negative for the first time
. 
    Five-year Treasury yields dropped to a record low at 0.312%
.
    World stock markets and oil prices tanked, and Wall Street
followed suit in early morning trading, with the Dow Jones
Industrial Average down 7.3% percent and the S&P 500
index Sdown 7.0%.
    "The Treasury moves are quite striking; the market is
struggling to find an equilibrium for Treasuries, the most
liquid asset around," Commerzbank rates strategist Rainer
Guntermann said.
    
      March 9 Monday 9:25AM New York / 1325 GMT
    
    
                               Price        Current   Net Change
                                            Yield %   (bps)
 Three-month bills             0.2825       0.2874    -0.188
 Six-month bills               0.25         0.2538    -0.150
 Two-year note                 101-165/256  0.2884    -0.189
 Three-year note               103-20/256   0.3201    -0.188
 Five-year note                103-198/256  0.3587    -0.195
 Seven-year note               104-224/256  0.415     -0.247
 10-year note                  110-80/256   0.438     -0.269
 30-year bond                  129-216/256  0.8661    -0.349
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        18.25         5.50    
 spread                                               
 U.S. 3-year dollar swap        15.75         5.25    
 spread                                               
 U.S. 5-year dollar swap        15.00         4.25    
 spread                                               
 U.S. 10-year dollar swap       12.25         6.25    
 spread                                               
 U.S. 30-year dollar swap      -30.25         6.50    
 spread                                               
 

 (Reporting by Karen Brettell in New York, Karen Pierog in
Chicago and Dhara Ranasinghe in London; Editing by Alex
Richardson, Ed Osmond and Jonathan Oatis)
  
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