US Treasury yields ticked lower on Tuesday as traders kept up the flight to safety on concerns the coronavirus epidemic would have a significant impact on global growth. Even as global stock markets stabilized the day after a sell-off, the benchmark 10-year yield was down in morning trading at 1.3688%, edging closer to its all-time low of 1.321% reached on July 6, 2016.
Dozens of countries have accelerated emergency measures to curb the spread of the coronavirus, which has killed 2,663 in China although the World Health Organization (WHO) says the epidemic there has peaked.
Even before the epidemic's reach expanded, many traders had re-evaluated expectations for global growth in 2020, said John Herrmann, director of US rates strategy for MUFG Securities. Fears of the outbreak accelerated a decline in yields on instruments like the 10-year, which had been approaching 2% late last year, he said.
"People had started to dial down their expectations. The coronavirus just piled onto that as a giant risk-off trend," Herrmann said.
Traders will watch results of a US Treasury auction of $40 billion worth of two-year notes later on Tuesday. The yield on the note, which typically move in step with interest rate expectations, was down 2.3 basis points at 1.2433% in morning trading.
Believed to come from wildlife in Wuhan city late last year, the flu-like disease has infected 80,000 people and killed 2,663 in China.
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