Market Insider

'Shell shock' bond move sends yields to pre-taper low

Gold & the bond market

Global bond yields are in a deep slide, taking the 10-year U.S. Treasury to a level not seen since Octoberwell before the Fed began winding down its easy money program.

The common themes are accommodating central bankers and concerns about growth. In the U.S. a short position in Treasurys continues to support the market as investors are forced to cover with each notch higher in price and lower in yield. Yields were lower across the curve, but the 10-year yield broke below a range that it has held since the end of October, touching a low yield of 2.52 percent.

Reports that the European Central Bank has a road map for new stimulus, following ECB President Mario Draghi's dovish words last week, sent sovereign yields in Europe lower with some hitting all-time lows. The 10-year German bund yield touched 1.36 percent Wednesday.

"The biggest bond markets cannot really disconnect from each other. Global bond investors are looking across and saying 'Treasurys are cheap compared to bunds,'" said George Goncalves, head of rate strategy at Nomura.

Meanwhile, the 10-year gilt was as low as 2.57 percent after the Bank of England's inflation forecast and comments from Bank of England Governor Mark Carney suggested the BOE may not raise rates as soon as markets expected.