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US 30-year bond yield falls to record low, threatens to break below 2%

Key Points
  • A global hunt for safer assets has driven the 30-year Treasury bond to a record low.
  • Long-term yields have plunged this month amid worries about U.S.-China trade developments and GDP growth.
  • It's in part a response to bond yields rates around the world that have gone negative.

The yield on the benchmark 30-year Treasury bond plunged to a record low on Wednesday as a global hunt for safer assets threatened to send the rate below 2% for the first time in history.

Shortly before 8 a.m. ET, the yield on the U.S. 30-year bond traded at 2.015%, well below its prior all-time low of 2.0889% hit in the days following Britain's June 2016 referendum to leave the European Union.

"That this happened with no negative bombshells overnight is significant because a move like this (that is not event-driven), is rooted in something much more secular and durable like a darkening global economic outlook and an ability to look at the forest past the trees when it comes to where inflation is heading down the road," Gluskin Sheff's chief strategist David Rosenberg wrote in a note.

Bond market anomalies were the focus of Wall Street on Wednesday. Along with the record low in the 30-year yield, plunging long-term rates caused the 10-year yield to fall below the 2-year rate, a reliable recession indicator.

Long-term yields have swooned this month as worries about U.S.-China trade developments and GDP growth — coupled with expectations for lackluster inflation and more aggressive central bank action — have sent traders in search of safer investments.

"It's a very unusual time period," said Arthur Bass, managing director of fixed income financing, futures, and rates at Wedbush Securities, noting that U.S.-China trade war as well as negative yields in Europe and Japan have created a set of rare headwinds.