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.