Worldwide bond yields plummet due to coronavirus outbreak

10 Mar 20

Government bond yields across the world have plummeted, due to the combination of a sharp decline in oil prices and market uncertainty surrounding the coronavirus outbreak.

Yields on US government bonds, regarded as one of the safest assets in the world, have all fallen below 1% for the first time in history, following the Federal Reserve's decision to cut interest rates.

The yield on the 10-year Treasury bond touched a record low of less than 0.4%, compared to 1.15% last week.

The 30-year Treasury bond yield slid below 1% for the first time in history, dropping as low as 0.7% on Monday, compared with 1.3% on Friday.

UK government bonds hit new record lows by the close yesterday; ten-year bonds were paying a yield of 0.16%, down from 0.36% on Friday.

Two-year bonds fell into negative territory for a period yesterday, rebounding to close 0.071%, falling from 0.15% on Friday.

The drop in yields is linked with the uncertainty around coronavirus and the fall in oil prices, as government bonds carry less risk, leading to investors to flock to the safety they offer.

German bond yields fell further into negative territory on Monday, as 10-year bonds fell by 11 basis points to -0.84% yesterday.

Yields on Indian government's 10-year bonds also slumped 13 basis points on Monday, hitting an 11-year low, closing on 6.05%.

Conversely, yields on Italian bonds rose drastically, with two-year bonds up by 56 basis points to 0.646%, after the country ordered a virtual lockdown across much of its northern region. Italy's 10-year yield was also up 23 bps to 1.31%.

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