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US treasury yield drop after Fed’s strong actions

US treasury yield drop after Fed strong actions

U.S. treasury yields dropped sharply, but currently above the low, after the emergency action from the Federal Reserve overnight to mitigate the economic damages from the rapid spread of the coronavirus.

The yield on the 10-year bonds plunged 18.4 percent to 0.778 percent, noting that it fell to a bottom of 0.640 percent earlier in the session. Last week, it registered a record low of 0.318 percent.

Last night, the Fed took another emergency action by cutting interest rates to zero, announcing new QE measures at least $700 billion and extending U.S. dollar swap lines to other key economies.

However, it seems that the Fed’s move was not enough to calm the panicked markets, where investors continued to resort to safe havens, led by government bonds.

The return on the U.S. shorter maturity 2-year treasuries dipped 31.30 percent to 0.338 percent after hitting a low of 0.276 percent.

Global central banks have announced stimulus measures to bolster their economies, but stock markets reacted negatively due to the rapid spread of the Covid-19.

The US dollar index, which tracks the movements of the green currency versus a basket of six major currencies, resumed its rise for a fourth straight session to 98.45.

Wall street futures hit their limit down of 5 percent, which means that they will probably fall more when they open.

The death toll from the novel coronavirus has surpassed 6,500 worldwide, with confirmed cases totaling more than 170,000.

Later in the day, G7 representatives will meet via satellite to discuss measures to deal with the economic impact of the coronavirus outbreak.

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