Safe haven buying pushes 10-year Treasury below 2%

Traders in the 10-year bond options pit at the Chicago Board of Trade signal orders.
Frank Polich | Reuters
Traders in the 10-year bond options pit at the Chicago Board of Trade signal orders.

U.S. sovereign bond prices rallied on Wednesday, weighing on yields amid a global stock market sell-off as fears surrounding the Chinese economy and oil oversupply gripped markets.

Crude futures slumped again on Wednesday, with U.S. oil falling to its lowest since September 2003 below $28 a barrel on worries over a global supply glut.

U.S. 10-year yields tumbled to 1.99685 percent, after closing at 2.036 percent on Tuesday. Meanwhile, longer dated 30-year bonds fell to 2.7377 percent after finishing at 2.806 percent in the previous session.

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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Asian and European stocks sold off dramatically early Wednesday, with Japan's Nikkei slipping into bear territory and European bourses seeing losses of around 3 percent. The three major U.S. averages fell at least 1.5 percent each.

The fall in oil prices followed warnings from the International Energy Agency on Tuesday that oil markets could "drown in oversupply".

U.S. crude futures were trading down 7.1 percent at $26.44 a barrel Wednesday — a new low since September 2003.

The contract settled down 3.26 percent in the previous session.

Brent futures dropped 97 cents to $27.79 a barrel, hovering around the 12-year low hit on Monday.

The contract settled down 96 cents, or 3.26 percent, in the previous session.

Investors also digested U.S. economic data on Wednesday. The consumer price index dell 0.1 percent in December, while housing permits and starts for December also fell.