NEW YORK (MarketWatch) -- Treasurys rose early Wednesday, sending yields to record lows, as U.S. government debt continued to benefit from the Federal Reserve's move to cut interest rates to unprecedented levels.
The benchmark 10-year Treasury bond rose, sending its yield down to a record 2.143%.
Yields on two-year notes fell to 0.66%, matching multi-decade lows hit last week.
On Tuesday, the Fed slashed its key rate to a range of zero to 0.25%, far lower than the cut to 0.5% expected, and repeated it take other measures to boost growth, particularly buying debt to lower other market rates.
"Tuesday's heavy-duty Fed cut to 0.0%-to-0.25% for the funds target left rates well below core inflation trends, which dipped to 2.0% year-on-year in November," said Sal Guatieri, senior economist at BMO Capital Markets. "Such deeply negative real rates have been seen only rarely in the past 50 years."
Bonds showed little immediate reaction to a report showing a narrowing in the third-quarter current account deficit to $174.1 billion.
"To finance the current account deficit, Americans are borrowing and selling assets at a pace of about $400 billion a year," said Peter Morici, an economist at the University of Maryland. "U.S. foreign debt exceeds $6.5 trillion, and the debt service comes to about $2,000 a year for every working American."
