US 10-year Treasury note yield falls below 2.8% as investors pivot to safe havens

  • Weakness in equities markets appeared to push traders back into fixed income, as a 1.8 percent decline in the S&P 500 added to its 4 percent decline over the past week.
  • "Renewed volatility in risky assets is causing volatility in risk-free assets; this may be due to changing views on the strength of the economy," said Gary Pollack of Deutsche Bank Private Wealth Management.
  • The latest downward move in the 10-year yield comes less than one week after it approached multiyear highs around 2.93 percent after the Federal Reserve hiked rates.

U.S. government debt yields fell Tuesday as another decline in stocks pushed investors into safer assets like long-term debt.

The yield on the benchmark 10-year Treasury note fell roughly 7 basis points to 2.777 percent at 4:53 p.m. ET, while the yield on the 30-year Treasury bond fell 4 basis points to 3.031 percent. Bond yields move inversely to prices.

The latest downward move in the 10-year yield comes less than one week after it approached multiyear highs around 2.93 percent immediately after the Federal Reserve hiked interest rates.

The yield has fallen more than 15 basis points since Wednesday's high and is at its lowest level in roughly seven weeks.

Weakness in equities markets appeared to push traders back into fixed income late Tuesday, as a 1.8 percent decline in the S&P 500 exacerbated the index's 4 percent decline over the past week.

"I'm a little surprised, but not totally. I wasn't sure if we'd ever see the 10-year yield below 2.8 percent again," joked Gary Pollack, head of fixed-income trading at Deutsche Bank Private Wealth Management. "The renewed volatility in risky assets is causing volatility in risk-free assets; this may be due to changing views on the strength of the economy."

The Dow Jones industrial average, meanwhile, fell more than 350 points to bring its own weekly decline to 3.6 percent.

"I think that's helping bonds here a little bit," Pollack added. "We could have periods where rallies are one step forward and two steps back."

The bid in Treasurys came after yet another sizable debt auction on Tuesday.

The Treasury Department auctioned $35 billion in five-year notes at a high yield of 2. 612 percent. The bid-to-cover ratio, an indicator of demand, was 2.5. Indirect bidders, which include major central banks, were awarded 63.5 percent. Direct bidders, which includes domestic money managers, bought 8.3 percent.

By the end of the week, the Treasury will have auctioned nearly $300 billion in debt as the government tries to finance President Donald Trump's $1.3 trillion budget in addition to the $1.5 trillion tax cut passed in December.

Investors around the world continued to watch for new developments surrounding global trade. Last week, President Donald Trump signed an executive memorandum that would inflict tariffs on Chinese imports — of up to $60 billion, triggering China to retaliate. However, more recently, news has emerged that the nations are open to discussions.

According to Reuters, China's Premier Li Keqiang told a conference Monday that both the U.S. and China should continue talks, with Keqiang pledging to maintain open markets, in the hope of preventing a potential trade war.