Bonds

10-year Treasury yield rebounds from record low

Treasury yields rebounded from record lows as investors returned to the stock market following its worst day since the financial crisis.

Treasurys

The yield on the 10-year Treasury note popped 20 basis points to around 0.70%. The benchmark rate tanked to a record low of 0.318% on Monday. The yield on the 30-year Treasury bond also climbed back above 1%, last trading at 1.16%.

Stocks climbed on Tuesday after suffering its worst one-day sell-off since 2008. The Dow Jones Industrial Average cut most of its gains in midday trading, however, last up 232 points higher, or 1%. At its session high, the Dow was up more than 900 points. 

The gains in stocks came after President Donald Trump floated the idea of "a payroll tax cut or relief" to offset the negative impact from the coronavirus. The potential tax incentives come on top of an $8.3 billion spending package Trump signed last week.

"Treasuries have relinquished a portion of their recent gains in concert with a bounce in risk assets," Ian Lyngen, BMO's head of U.S. rates, said in a note Tuesday. "The absence of any decidedly positive news on the Covid-19 front is consistent with the interpretation that the reversal is about the price action itself as opposed to any fundamental developments of merit."

The market suffered a historic sell-off in the previous session, with the Dow and the S&P 500 plunging 7.8% and 7.6%, respectively, both posting their worst day since the financial crisis. Investors crowded into Treasurys for safety, pushing yields to record lows.

The historic flight to bonds seen in recent days started with concern over the global spread of the new coronavirus, which has now infected at least 110,029 people worldwide and caused at least 3,817 deaths, according to the latest World Health Organization (WHO) figures.

This risk-off sentiment was compounded by plunging oil prices on Monday as the 14 oil-exporting countries of OPEC and ally Russia seemingly entered a price war after failing to agree a deal on production cuts.

Redbook data for last week is expected at 8:55 a.m. ET on Tuesday. And an auction will be held for $38 billion in three-year Treasury notes.

— CNBC's Elliot Smith contributed reporting.