The yield on the benchmark 10-year Treasury fell to a 20-month low on Tuesday as escalating trade tensions between the US and China and elevated concerns over a slowing global economy continued to drive interest in safe government bonds.
The yield on the 10-year note, which moves inversely to price, fell as much as 6 basis points to 2.26 per cent, the lowest level since September 26 2017. The yield on the 30-year dropped 5bp to 2.70 per cent, a 17-month low. The two-year yield moved 4bp lower to 2.12 per cent.
“The trade issue with China is having a pronounced effect on global growth and the market thinks the Fed needs to cut rates from here,” said Tom di Galoma, managing director at Seaport Global. “The economy is slowing and I don’t think this trade issue is going away anytime soon.”