Treasury yields dropped on Tuesday after an outbreak of a new strain of coronavirus linked to pneumonia in China sent investors fleeing risk assets.
The yield on the benchmark 10-year Treasury note, which moves inversely to price, fell 5 basis points to 1.767%, while the yield on the 30-year Treasury bond was also down at 2.229%.
The outbreak of a new coronavirus in Wuhan, China has killed four people with confirmed cases exceeding 200 ahead of the Lunar New Year holiday, during which hundreds of millions of people are expected to travel.
Late on Monday, Chinese authorities confirmed that the virus is contagious, and experts have called back the economic fallout from the deadly Severe Acute Respiratory Syndrome (SARS) crisis in 2003.
The Centers for Disease Control told Reuters Tuesday that a traveler from China was diagnosed with the first U.S. case of coronavirus in Seattle.
"The Treasury market benefited overnight from coronavirus concerns as well as Moody's downgrade of Hong Kong's long term debt rating," Ian Lyngen, BMO's head of U.S. rates, said in a note on Monday.
Moody's said Hong Kong's institutions and governance strength is lower than previously estimated, citing an inability to resolve the issues underlying the recent protests.
The International Monetary Fund (IMF) on Monday revised down its economic growth projections for 2020 from 3.4% to 3.3%. The U.S. growth outlook was revised down to 2.0% from 2.1% in the IMF's October forecast.
Auctions will be held Tuesday for $42 billion worth of 13-week Treasury bills and $36 billion in 26-week bills.