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The overwhelming uncertainty around the ultimate economic impact of the COVID-19 epidemic making its way across the world, has sent investors diving into cover.
The chief beneficiary of this demand for safety has been government bonds even as the interest earned from holding such paper looks increasingly meager to savers, pension funds and insurance companies.
See: What’s next for the 10-year Treasury? Wall Street has no more idea than you do
Here’s a roundup of the record-setting bond-market moves that is drawing the attention of investors:
- TMUBMUSD10Y, 0.752% The 10-year Treasury note yield is trading below 0.70%, its lowest in history. At the start of the year, the benchmark maturity stood at 1.91%, and has since given up close to 1.20 percentage points.
- TMUBMUSD02Y, 0.468% The 2-year Treasury note yield is standing at a 2014 low of 0.445%. The short-dated maturity is sensitive to how bond traders envision future interest rates.
- The 30-year U.S. yield stripped out for inflation expectations, or the real rate, pushed into negative territory this week, trading at negative 0.14%. Traditionally, the long-dated government bond has been particularly sensitive to the corrosive impact of inflation expectations. Negative real yields gives an indication of the over-riding demand for long-dated bonds among institutional investors like pension funds that need to match their extended liabilities with investments that pay out for a long time.
- TMBMKDE-10Y, -0.719% The German 10-year government bond yield is at negative 0.72%, near its record intraday low of 0.74% set six months ago.
- TMBMKGB-10Y, 0.250% The 10-year U.K. government bond rate fell to a record low of 0.20% on Friday, even as expectations grow for the U.K. to widen its budget deficit and finance a major fiscal stimulus package.
- Corporate credit has taken a beating over the last few weeks. The yield premium investors pay for owning sub-investment grade corporate bonds, or junk debt, over Treasurys widened to 5.05 percentage points on Thursday, its highest levels since early January 2019, according to data from Bank of America Merrill Lynch.
See: Investors flee stocks and bonds, pile into cash, fund flow data show
