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8/12/2019, 12:57 PM (Source: TeleTrader)
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Treasuries soar as trade war lifts haven demand

Risk aversion continued on Wall Street on Monday after two weeks of turbulence, spurred by intensified measures in the trade policy struggle between the United States and China. The disputes have been worsening and spilling over to currency management as central banks throughout the world are returning to easing efforts and monetary stimulus, translating to downward pressure on yields. As stocks on Wall Street fell in premarket trade, investors turned to benchmark sovereign debt.

Securities issued by the Department of the Treasury in Washington jumped and took rates below to test last week's two- to three-year bottoms and even all-time low. Market participants start to analyze the possibility for rates to go negative. It was recently unthinkable, but some banks in Europe have already touched zero or slightly negative borrowing costs for mortgages on a nominal basis.

The two-year US yield fell 3.3 basis points to 1.604% at 6:55 am ET. The 10-year rate plunged 5.3 points to 1.695% compared to the 6.1-point decline to 2.201% for the 30-year bonds. Corresponding futures prices jumped 0.1%, 0.39% and 0.7%, respectively.

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