Bonds

2-year Treasury yield hits new record low of 0.105%, inching closer to zero

The two-year Treasury yield hit an all-time low on Friday, as more economic data pointed to the devastating impact from the coronavirus pandemic. 

The rate reached a record low of 0.105% on Friday after the Labor Department said a record number of Americans lost their jobs in April amid the coronavirus-induced economic shutdown. The two-year yield last traded at 0.121%.

Treasurys

However, yields on longer-maturity notes remained higher on the day. The yield on the benchmark 10-year Treasury note rose 2 basis points to 0.657% and the yield on the 30-year Treasury bond jumped 4 basis points to 1.362%. Yields move inversely to prices.

At the end of March, yields on both the 1-month and 3-month Treasury bills dipped below zero after the Federal Reserve cuts its benchmark rate to near zero and as investors have flocked to the safety of fixed income amid general market turmoil. They have since rebounded and traded around 0.1%.

The Labor Department reported Friday the coronavirus wiped 20.5 million workers from nonfarm payrolls and sending the unemployment rate skyrocketing to 14.7% last month.

April's unemployment rate topped the post-war record 10.8% but was short of the Great Depression high estimated at 24.9%. The financial crisis peak was 10% in October 2009.

Still, the figures came in better than Wall Street's expectations. Economists surveyed by Dow Jones had been expecting payrolls to shed 21.5 million and the unemployment rate to go to 16%. 

"This was a historic report by any means, but investors have to look through the headline figure to get a better understand of the lasting effects to the economy," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "Today's report tells us the labor market isn't as dire as the headlines suggest, which is why equity prices and bond yields are getting a lift."

Meanwhile, investors eyed signs relations between Washington and Beijing are warming, as U.S. and Chinese trade representatives agreed to strengthen their cooperation in implementing the "phase 1" trade deal. The news has soothed some markets, following growing concerns about increasing tensions between the U.S. and China — two of the largest economies in the world.