Treasurys flipped between negative and positive territory on Monday as concerns surrounding global economic growth pushed the 10-year note yield to its lowest level since April and caused volatile swings in U.S. stocks.
Fears of a global market slowdown have caused investors to anxiously question if the Federal Reserve will raise interest rates in September. That initially spurred safe-haven buying of U.S. Treasurys, but demand cooled as stocks pared earlier losses and as markets increasingly priced in the unlikelihood of the Fed boosting interest rates in next month.
Ten-year Treasury note yields touched a session low of 1.90 percent, breaching the 2 percent level for the first time since April, but the security recouped most of those losses. It was last down about 2 basis points at 2.02 percent.
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The 10-year yield briefly turned positive, but it fell back into the red after DoubleLine Capital's co-founder Jeffrey Gundlach, told Reuters that the U.S. equity markets would face another round of severe selling pressure.
Major U.S. stock indexes each tumbled about 4 percent. The Dow closed down 588 points, or 3.6 percent, at 15,871 after falling as much as 1,089 points earlier.
State Street Global Advisors' Michael Arone said the recent stock selloff, "in my perspective, is a natural course adjustment" driven by the unexpected devaluation of China's yuan and the uncertainty of when the Fed will raise rates.
"Once the dust settles, I think U.S. stocks will move higher," Arone said, citing the expectation that second-quarter U.S. GDP will be revised upward later this week and the likelihood that inflation will remain low going forward.
He expects stocks and benchmark Treasury yields to rebound in the third and fourth quarters of this year.