U.S. government debt yields fell Wednesday as a global decline in stock markets pushed investors into perceived safer assets like long-term debt.
The yield on the benchmark 10-year Treasury note slipped to 2.779 percent as of 4:13 p.m. ET and hit its lowest level since February earlier in the session. The yield on the two-year note was slightly higher at 2.286 percent. Bond yields move inversely to prices.
The latest downward move in yields comes after a sharp drop in U.S. stocks. The Dow Jones industrial average fell more than 300 points on Tuesday as tech shares posted their worst session since Feb. 8. The move lower in U.S. equities led European and Asian stock markets lower, making so-called safe havens like Treasurys more attractive.
"Treasurys are watching equity markets," said Arthur Bass, managing director of fixed income financing, futures, and rates at Wedbush Securities. "If equities continue to sell off, we could see further improvement in fixed income."
The move lower in yields took place a week after it approached multiyear highs around 2.93 percent, immediately after the Federal Reserve hiked interest rates. The decline in yields also pushed the spread between the two-year and the 10-year yield to its lowest level since 2007.
"We are at a key level in the yield curve," Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a note. "Helping to flatten it this week was not only the tech driven market selloff ... but a drop in yields in Europe after a slew of economic data misses relative to expectations."
In economic news, the U.S. economy grew by 2.9 percent in the fourth quarter, according to the final read on the U.S. economy for the period. Elsewhere, pending home sales in the U.S. rose last month.
The Treasury Department auctioned $29 billion in seven-year notes at a high yield of 2.72 percent. The bid-to-cover ratio, an indicator of demand, was 2.34, its weakest level since February 2016. Indirect bidders, which include major central banks, were awarded 55.8 percent, also the lowest level since February 2016. Direct bidders, which includes domestic money managers, bought 12.1 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.