US Treasury yields fell to three-week lows on Tuesday as stock markets tumbled, raising demand for low-risk US government debt, with analysts citing frustration with the pace of the Trump administration's fiscal plans as a factor behind the move. Wall Street fell sharply on Tuesday with the S&P 500 and Dow Jones Industrial Average down around 1 percent. They are on track for their worst one-day percentage declines since before Trump's election victory in November.
"Stocks are down, and bonds are reacting to that," said Lou Brien, a market strategist at DRW Trading in Chicago.
Analysts attributed the selling to reduced confidence that US President Donald Trump's pro-growth policies, including financial deregulation, would be implemented soon.
Trump is facing opposition from lawmakers on his plan to dismantle Obamacare, with any new fiscal stimulus likely to be delayed as the administration prioritizes domestic issues including healthcare.
Benchmark 10-year US Treasuries gained 11/32 in price to yield 2.43 percent, the lowest yield since March 1 and down from 2.50 percent earlier on Tuesday.
Expectations of a less aggressive Federal Reserve than some investors had expected added to bond gains on Tuesday.
Yields have fallen since the US central bank last Wednesday raised interest rates, as expected. Some investors had anticipated the Fed would also take a more hawkish tone on future rate hikes on expectations of stronger growth.
"They concentrated so much fire power toward the rate decision that they created this atmosphere of urgency in the minds of traders," said Jim Vogel, an interest rate strategist at FTN Financial in Memphis Tennessee.
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