2-year Treasury yield falls to more than 8-year low after record drops in retail, manufacturing

Treasury yields plunged on Wednesday as the latest economic data underscored the coronavirus' devastating blow to the U.S. economy.


The yield on the benchmark 10-year Treasury note dropped 10 basis points to 0.64%, while the yield on the 30-year Treasury bond fell about 13 basis points to 1.27%. The benchmark 10-year Treasury yield hit an all-time low of 0.318% in early March amid a historic flight to bonds.

The two-year yield hit a low of 0.195%, its lowest level since September 2011. Bond yields move inversely with prices.

U.S. retail sales for March dropped 8.7% amid the coronavirus shutdowns, the biggest decline since the government started tracking the series in 1992. Meanwhile, manufacturing in the New York area fell by its biggest margin ever to a historic low. The Empire State Manufacturing Index hit -78.2, worse even than the -32.5 expected by economists surveyed by Dow Jones.

"The shutdowns didn't really begin in earnest until mid month so part of this data reflected many parts of the economy that was still open when surveyed," Peter Boockvar, chief investment officer at Bleakley Advisory Group, said of retail sales reading, "Thus, the April data will be more reflective of the almost complete shutdown."

As of Wednesday, global cases of the coronavirus have reached nearly two million with 1,996,681 infections, according to Johns Hopkins University. In the U.S., 609,685 people have contracted the fast-spreading virus and more than 26,000 Americans have died.

The International Monetary Fund (IMF) on Tuesday warned that the global economy in 2020 will likely suffer its worst recession since the Great Depression.

Earnings season kicked off this week with the first batch of quarterly results showing the outbreak is taking a toll on corporate profits. Some of the largest U.S. banks including Bank of America and Goldman Sachs reported big profit declines.

Still, President Donald Trump said Tuesday evening that he believes some states will be able to lift social distancing rules and "reopen" their economies by the end of April. Trump said he "will be speaking to all 50 governors very shortly" and "will then be authorizing each individual governor of each individual state to implement a reopening."

Auctions will be held Wednesday for $30 billion of 103-day Treasury bills and $30 billion of 154-day bills.

— CNBC's Elliot Smith contributed reporting.