Bonds

Treasury yields fall as US oil prices sink

Treasury yields fell on Monday as investors grappled with a plunge in oil prices.

The yield on the benchmark 10-year Treasury note dipped about 3 basis points to 0.63%, while the yield on the 30-year Treasury bond was also lower at 1.24%. Bond yields fall as prices rise.

Treasurys

U.S. oil prices tumbled to their lowest level in history on Monday, with crude storage facilities filling rapidly as the coronavirus pandemic continues to crush demand.

The May contract for West Texas Intermediate, which expires on Tuesday, plunged more than 100% to settle at negative $37.63 per barrel on weak demand outlook and storage capacity issues.

"It is clear the eroding prospects for crude consumption are undermining at least near-term inflation expectations," Ian Lyngen, BMO's head of U.S. rates, said in a note on Monday. "It's a bit early to assume energy will establish a new, significantly lower, plateau which will become the new norm once the global economy has finally reopened for business."

Meanwhile, investors continued to monitored coronavirus-related news. New York Gov. Andrew Cuomo said Sunday the state is "past the high point" of new cases, noting the infection rate has fallen along with coronavirus-related hospitalizations. Cuomo added New York will roll out antibody testing this week. In New Jersey, Gov. Phil Murphy said Saturday: "We're flattening the curve."

In Washington, Treasury Secretary Steven Mnuchin said the administration and Congress were close to striking a deal on a second round of loans for small businesses. A $349 billion rescue loan program ran out of money on Thursday.

There are no economic data releases scheduled. The U.S. Treasury is set to auction $99 billion in 13- and 26-week bills.