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Markets

Yields fall as COVID-19, jobs report cloud economic view

  • The benchmark 10-year yield was down 2.5 basis points at 0.6593%.
  • The trading followed a similar pattern on Wednesday and brought the note's yield far below its monthly high of 0.959% reached on June 5.
25 Jun, 2020

US Treasury yields fell on Thursday as traders bought safe-haven assets while the COVID-19 pandemic continued to spread and layoffs stayed high.

The benchmark 10-year yield was down 2.5 basis points at 0.6593%.

The trading followed a similar pattern on Wednesday and brought the note's yield far below its monthly high of 0.959% reached on June 5.

Initial claims for state unemployment benefits totaled a seasonally adjusted 1.48 million for the week ended June 20, down from 1.54 million in the prior week, the Labor Department said on Thursday, but still a large number, buttressing views the labor market could take years to recover.

The figures came alongside investor concerns that the United States has failed to stop the spread of the coronavirus, driving up demand for treasuries, said Michael Lorizio, senior fixed income trader for Manulife Investment Management.

"These significant spikes of cases in different areas of the country have rightfully caused investors to re-examine their expectations for recovery," Lorizio said.

On Wednesday several states ordered new quarantines for some travelers, Walt Disney Co delayed the reopening of its theme parks, and Nevada's governor signed a directive requiring face coverings in casinos and all other public places.

Wall Street opened lower Thursday, also reflecting unnerved investors.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 48 basis points, about a basis point lower than its close on Wednesday and its lowest since a week ago.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1818%.

The Treasury Department is scheduled to release the results of an auction of seven-year notes in the early afternoon.

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