US Treasury yields were higher on Wednesday as traders adjusted portfolios against risks that the spreading coronavirus epidemic would have a major economic impact.
The benchmark 10-year yield was up 3.7 basis points in morning trading at 1.3671%, a day after it reached a new record low of 1.3072%.
A dominant theme was the extent to which the epidemic would disrupt global supply chains and services, and provoke official responses from governments and central banks.
Jim Barnes, director of fixed income at Bryn Mawr Trust, said Wednesday morning's trading hardly showed investors ready to move out of Treasuries, seen as a safer investment compared to equities and other asset classes.
For investors seeking safety or predictability, he said, "There are many assets to sell and very few assets to buy, so they're throwing out stuff on the equities side that is easy to sell, and turning to safety."
Even though Treasury yields were up from their lows, Barnes said, "I wouldn't say these yields are attractive, it's more a place to park cash."
German government bond yields rose on Wednesday after reports that Germany's finance minister plans to temporarily suspend the country's debt brake, and euro zone money markets started to price in a December ECB rate cut expected as a stimulus measures.
Wall Street investors were cautious as the US Centers for Disease Control and Prevention urged Americans to prepare for the virus to spread in the United States.
Although the outbreak in China had peaked, the World Health Organization cautioned that its rapid spread worldwide was inevitable. As of Wednesday, the death toll in Italy had crossed 19 and new cases in South Korea rose above 1,260.
Investors will also be tracking the results of a US Treasury auction of $41 billion of five-year notes on Wednesday.
The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 1.1965% in morning trading.
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