How Low Can Bond Yields Go? No Record Is Safe.
The coronavirus-induced rally in U.S. Treasuries shows no signs of slowing down.
Stocks, debt, gold and other assets need to price in the fact that the outbreak is not under control.
Photographer: Louisa Gouliamaki/AFP/Getty Images
As a markets columnist, I don’t like writing about the spreading coronavirus. First and foremost, the news just gets worse by the day in terms of human lives lost, and I’m no epidemiologist. On top of that, the outbreak has also led to weeks of whipsawing headlines. One day, U.S. stocks will tumble as virus concerns mount. Days later, equities will reach records as virus fears ease. And on and on it goes.
The last time I checked in was Jan. 27. On that day, the S&P 500 Index dropped by the most since October and benchmark 10-year Treasury yields fell almost 8 basis points to 1.6%. At the time, a handful of sell-side strategists said the move couldn’t possibly last. I argued that investors may hate buying Treasuries at a 1.6% yield, but it might not be such a bad move, given how 2020 has started.