As the U.S. 10-year Treasury yield has fallen to a new low, many analysts believe that an economic recession is likely to happen. Investors are looking at bonds as a haven.
The U.S. 10-year Treasury yield has fallen below 1.04%. This drop came as other rates in the United States have been dropping as well.
This is occurring due to the global economic disruptions caused by the emergence of the coronavirus. Already, Wall Street has reportedly been calling for the Federal Reserve to intervene via stimulus. This has shown that the 10-year Treasury yield might be appealing to investors.
10-Year U.S. Treasury Yield Leads Others in Decline
Sources indicate that the yields fell to 1.036% through the night. It returned to normalcy at 1.05%. The 2-year yield also reportedly reduced to 0.71%. The 30-year yield was at a surprising 1.623%. This has been noted by many analysts to be a new low.
Many in wall street are making big bets on the Feds intervention. This intervention is expected to be a special one considering the effects of the COVID-19 on the global economy. The U.S. economy is expected to slow down due to gaps brought on by COVID-19. The feds futures market as its price cut by 50 basis points. Several analysts are already considering 100 points cut by the FED.
The Feds aren’t sitting still either. Fed Chairman Jerome Powell has indicated in a statement that the coronavirus “poses evolving risks”. He also said that Fed officers will use our tools and act as appropriate to support the economy.”
COVID-19 fears have seen the markets go topsy-turvy. The bond markets seem to be the beneficiaries of this. Yields are dropping to notable levels. The 10-year rate has dropped by about 37 points already. This occurred in February.
Analysts are already worried about last week’s market drop. Many are already referring to last week’s market tumble as a financial crisis.
This pervades investor sentiment as stocks are already set to go lower than normal this week. There may be a silver lining in the stock tumble as the U.S. government is also seeking to intervene.
Sources indicate that senior white house officials are looking at ways to soothe markets. This comes as the U.S. political space remains worried about the potential for the stock market drop to spiral into a global recession.
Analysts Think that Recession Is Likely to Happen
This, however, hasn’t stopped some analysts from crying wolf. Ed Hyman who is one of the top analysts on wall street has indicated Zero growth for the 2nd and 3rd quarters already. China’s new purchasing manager index is another kettle of fish. Sources report that the Chinese PMI dropped to a record low of 35.7. This is quite telling of the manufacturing sector. The sector is already facing a slowdown. This is due to COVID-19.
Stocks globally are expected to fall continuously. This is expected as the Chinese are a pillar of the global economy. COVID-19 has bared its fangs but we expect a rebound. It’s just a splash in the water as things will indeed return to normal after this fallout.