Treasury yields pare losses amid OPEC production report
U.S. Treasury yields gave up some losses Thursday amid a report that OPEC members could be ready to cooperate on a crude production cut.
Earlier in the day, yields plunged to levels not seen since 2012, in some cases, as worries over global growth and the effectiveness of central bank policy sparked huge demand for safe-haven assets. As stocks sold off Thursday morning, 30-year bond futures hit their highest level in 40 years, according to Bespoke Investment Group.
"The U.S. Long Bond future has broken out ... as 'risk-free' interest rates plummet," Bespoke wrote in a research note tracking markets back to 1977.
The yield on the 10-year Treasury note dropped below 1.55 percent to its lowest level since September 2012. But it recovered throughout the day, last trading at 1.6412 percent. The 30-year bond yield hit its lowest level in a year below 2.4 percent, but ticked higher to about 2.499 percent.
The yield spread between 10-year and 2-year notes also narrowed to its tightest level since November 2007 earlier in the day, reflecting an outlook for weak economic growth and low inflation.
Treasurys
| TICKER | COMPANY | YIELD | CHANGE |
|---|---|---|---|
| US1M | U.S. 1 Month Treasury | 5.38% | +0.015 |
| US3M | U.S. 3 Month Treasury | 5.41% | +0.023 |
| US6M | U.S. 6 Month Treasury | 5.401% | +0.019 |
| US1Y | U.S. 1 Year Treasury | 5.19% | +0.008 |
| US2Y | U.S. 2 Year Treasury | 4.859% | +0.002 |
| US10Y | U.S. 10 Year Treasury | 4.49% | +0.009 |
| US30Y | U.S. 30 Year Treasury | 4.634% | +0.012 |
Also on Thursday afternoon, the Treasury auctioned $15 billion in 30-year bonds at a high yield of 2.5 percent. The bid-to-cover ratio, an indicator of demand, came in at 2.09, versus a recent average of 2.35.
Direct bidders, which includes domestic money managers, bought 10.3 percent. Indirect bidders, which include major central banks, were awarded 58 percent.
The three major U.S. stock averages fell more than 1 percent each on Thursday.
Prices on fed fund futures, used to predict future U.S. policy rates by the Federal Reserve, surged across the board as investors further cut back expectations that the Fed will be able to engineer another rate hike anytime soon.
Fed fund futures contracts don't see the Federal Reserve raising rates until at least February 2018 and in fact are pricing in a small likelihood of a rate cut.
The moves come ahead of a second day of testimony to U.S. lawmakers by Federal Reserve Chair Janet Yellen.
Abroad, HSBC said it would cut yield forecasts later this year on the UK gilt to 1 percent from 1.4 percent.
— CNBC's Jeff Cox contributed to this report.