NEW YORK: US Treasury yields fell for a third straight day on Thursday, in line with declines in Europe and Britain, spooked by stock market weakness amid economic growth warnings from the European Commission and Bank of England as well as worries about the US-China trade talks.
Soft German data and the growth warnings, by the European Commission on Europe and the BoE on Britain, prompted investors to seek cover in US government debt.
Fresh concerns about US-China trade negotiations emerged after President Donald Trump confirmed on Thursday that he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline set by the two countries to achieve a trade deal.
The concerns accelerated losses in US stocks and pushed US yields to one-week lows.
“There are a lot of event risks out there that are worrying investors,” said Michael DePalma, chief executive of asset management firm PhaseCapital in New York. “But event risks are episodic, and it seemed like we have a lot of them at the same time.”
Germany’s 10-year bond yields dropped to their lowest level in more than two years, taking a step closer to zero percent, after the European Commission made sharp cuts to its European growth and inflation forecasts.
Consistently poor German data recently has raised concerns that Europe’s largest economy could tip into recession.
At the same time, British 10-year government bond yields touched an eight-month low after the BoE slashed growth forecasts for Britain.
A dovish Federal Reserve has also weighed on rates, DePalma said, although he believes the US economy does not warrant a change in the Fed’s stance.
In afternoon trading, US 10-year note yields fell to 2.651 percent, from 2.704 percent late on Wednesday. US 30-year bond yields were also down, at 2.993 percent, from 3.038 percent on Wednesday.
Thursday’s auction of US 30-year bonds was well-received, priced at 3.022 percent, which matched market forecasts at the bid deadline. Bids totalled almost $43.1 billion for a 2.27 bid-to-cover ratio, which was a little stronger than January’s 2.19.
On the short end of the curve, US 2-year yields slid to 2.479 percent, compared with Wednesday’s 2.524 percent.—Reuters
