The 30-year Treasury yield plunged to a record low on Friday as the coronavirus outbreak intensified fears about slowing global economic growth and caused investors to crowd into bonds. A weak reading on the U.S. services economy also helped send yields lower.
The yield on the 30-year Treasury bond dropped about 8 basis points to hit an all-time low of 1.892% in morning trading on Friday. The yield on the benchmark 10-year Treasury note, which moves inversely to price, fell 7 basis points to around 1.453%, its lowest level since Sep. 4.
The benchmark 10-year yield has fallen nearly 50 basis points this year, while the longer-duration bond rate has also plunged by about the same magnitude.
Investors grew increasingly concerned about the potential economic fallout of China's fast-spreading coronavirus. China's National Health Commission reported Friday that 75,465 cases of the coronavirus had been confirmed, with 2,236 deaths nationwide.
"There isn't anything the data can reveal on the positive side which would be sufficient to offset the coronavirus jitters that have once again weighed on risk assets and pressured rates lower," Ian Lyngen, BMO's head of U.S. rates, said in a note on Friday.
Earlier this week, the International Monetary Fund (IMF) warned the further spread of the deadly flu-like virus would amplify its global economic impact, with a long-lasting outbreak likely to result "in a sharper and more protracted slowdown in China."
South Korea reported 52 new cases of the coronavirus on Friday, taking the country's death toll to 156. Meanwhile, Japan reported the first fatalities from aboard the virus-hit Diamond Princess cruise ship that has been quarantined in Yokohama since early February.
Friday's weak economic data also pushed the yields down. The IHS Markit services purchasing manager's index dipped into contraction territory for February, hitting its lowest level since 2013.
While coronavirus is the latest concern for the economy, investors have been worrying about growth and the lack of inflation for a while now. Despite some upticks over the last few years, bond yields have consistently returned back to their downtrend.
Many investors have blamed global central banks' persistent monetary easing measures for the falling yields. Global policy makers have been slashing interest rates at the fastest rate since the financial crisis, with more than 25 cuts since the start of 2019, according to Deutsche Bank.
The bond market has been a source of concern for investors for a while now. Last summer, the benchmark 10-year yields dipped below the 2-year rate, inverting a key part of the yield curve. The inversion has been a reliable recession indicator as the phenomenon has preceded every recession over the past 50 years.
— CNBC's Sam Meredith contributed reporting.