U.S. Treasury yields fell on Thursday as global equities retreated amid doubts that, even after COVID-19 related lockdowns are dismantled, the economic bounce may be more gradual or weaker than assumed.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.619% fell 3.6 basis points to 0.615%, while the 2-year note rate TMUBMUSD02Y, 0.161% was virtually flat at 0.159%. The 30-year bond yield TMUBMUSD30Y, 1.288% slid 5.7 basis points to 1.296%.
What’s driving Treasurys?
Global risk asset prices came under pressure Thursday as investors questioned what a return to economic activity would look like in the U.S., Europe and Asia. The World Health Organization said the COVID-19 disease “ may become just another endemic virus in our communities, and this virus may never go away.”
Futures for the S&P 500 index SPX, -1.74% and Dow Jones Industrial Average DJIA, -2.17% looked to be extending their losses for the week, while the Stoxx Europe 600 index SXXP, -2.80% tumbled 2.2%. The bearish sentiment helped to spur inflows into U.S. government paper.
In U.S. economic data, weekly jobless claims rose by 2.98 million in the week ended May 9, slightly worse than a consensus forecast of 2.7 million according to Dow Jones data. The new claims also brought the coronavirus crisis total to nearly 36.5 million over the past two months, by far the biggest loss in U.S. history, sending the unemployment rate up to over 15%.
Senior Federal Reserve officials will make remarks on Thursday, with Minneapolis Fed President Neel Kashkari and Dallas Fed President Rob Kaplan on the docket.
Read: This ‘new threat’ to the U.S. economy flies in the face of conventional wisdom
What did market participants’ say?
“Powell’s comments (on Wednesday) didn’t spook the equity markets, but sentiment has deteriorated in the past three days to the point where we wonder if indices will halt at the lows of the range or threaten to break into April levels,” said Kenneth Broux, currency and rates strategist for Société Générale, in a note.
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