Long-term yields hit over one-year lows

US Treasuries yields plunged Tuesday, with long-dated yields hitting their lowest since May of last year, after fresh signs of economic weakness in Germany and a lower International Monetary Fund global growth forecast fuelled safe-haven bids.
German industrial production plunged 4.0 percent in August, the Economy Ministry said, the biggest drop since January 2009, raising concerns that Europe's largest economy is running out of steam. The data came a day after weak German industrial orders and euro zone investor sentiment data. In addition, the IMF cut its global economic growth forecasts to 3.3 percent this year and 3.8 percent next year from forecasts in July of 3.4 and 4 percent, respectively.
"It has just been a slow, grinding rally all day starting from the weak German data early this morning," said Shyam Rajan, US rates strategist at Bank of America Merrill Lynch in New York. He said the IMF outlook and short-covering contributed to the drop in yields. The US Treasury sold $27 billion in three-year notes to solid demand, the first batch of this week's $61 billion in new supply. Overall bidding, as measured by the bid-to-cover ratio, was at 3.42, the highest since a matching reading in February, analysts said.
Treasuries yields remained lower on the day despite US Labour Department data showing US job openings rose to 4.835 million in August from 4.605 million in July. "We're the best of the worst, and that's really helping the US," said Aaron Kohli, an interest rate strategist at BNP Paribas in New York, on the demand for safe-haven US government debt amid signs of weakness in overseas economies.
Analysts said Tuesday's plunge in US stocks underpinned safe-haven bids for Treasuries, with Rajan of Bank of America calling it a "consistent risk-off move." The benchmark S&P 500 was last down 1.47 percent. US 30-year Treasury bonds were last up 1-15/32 to yield 3.05 percent, from a yield of 3.13 percent late Monday and marking its lowest since May 2013.
Benchmark 10-year US Treasury notes were last up 21/32 in price to yield 2.35 percent, from a yield of 2.43 percent late Monday. The yield hit a session low of 2.34 percent, its lowest since August 29. US seven-year notes were last up 15/32 to yield 2.06 percent, from a yield of 2.13 percent late Monday. That yield was up slightly from a session low of 2.05 percent, which marked the lowest level since August 29.