US government debt yields dropped to record lows on Friday after a stunningly weak report on US job growth stoked worries of an economic slowdown and raised bets for a third round of bond purchases from the Federal Reserve. US Treasuries just finished their best month since September. Barclays' Treasury index rose 1.71 percent in May, making it the highest returning US bond sector last month.
Benchmark 10-year Treasury notes yields traded as low as 1.442 percent, the lowest level in records going back to the early 1800s, according to data gathered by Reuters. They last traded up 28/32 with a 1.47 percent yield, down 9 basis points on the day. The unrelenting bid for Treasuries could send benchmark yields closer to the 1-percent mark, an unlikely scenario 2-1/2 months ago when some analysts had predicted the end of the 30-year secular bull run for Treasuries.
The 10-year note yield peaked near 2.40 percent in mid-March, almost 1 point above its current level. An outcome of these very low Treasuries yields is record low mortgage rates, which are benchmarked against Treasuries. Rates on 30-year fixed-rate mortgages averaged a record low of 3.94 percent in the latest week, according to Bankrate.com.
Friday's 10-year note yield surpassed the record low set on Thursday of 1.53 percent. The 10-year yield is on track to fall almost 27 basis points for the week, which would be the biggest weekly drop since early November. The 30-year bond yield last traded at 2.54 percent, down 10 basis points from Thursday's close. The 30-year yield earlier touched 2.510 percent, a record low.