Stampede Into Treasuries Sets Up Auctions at Record Low Rates

Flight-to-safety in the world’s largest bond market will take on new meaning this week, with some Wall Street firms considering contingency plans for the spread of the coronavirus.

While traders await updates on their working arrangements, there may be little standing in the way of the haven trade that drove the U.S. 10-year yield down to an unprecedented 0.66% Friday amid an equities rout. The market will be watching for further liquidity strains in Treasury futures, and how that might translate into demand for more haven assets at this week’s Treasury auctions. Over the weekend, Saudi Arabia declared an all-out price war in the oil market, adding to the wall of worries over a looming recession and signs of strain in credit markets that have driven investors to the safety of Treasuries.