MW: Two-year yields fall to fresh record as investors flee stocks
Ten-year note yields retreat below 3% as 30-year's sink under 4% mark
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Yields on 2-year Treasury notes fell to the lowest on record Tuesday, as U.S. bonds benefited from fresh worries about global growth, this time stemming from economic data in China as well as concerns about the financial health of European banks.
"The fear of the unknown is causing many risk-adverse trades and a major flight to quality," said Andrew Brenner, head of emerging markets at Guggenheim Securities.
Yields on 2-year notes (UST2YR 0.63, -.00, -0.64%) , which move inversely to prices, fell as low as 0.59%, the lowest ever on an intraday basis. They recently traded at 0.62%, down 1 basis point, or 0.01%.
Yields on 10-year notes (UST10Y 2.99, -0.03, -1.06%) fell 2 basis points to the 3.00% mark. They earlier fell to 2.96%, the lowest since April 2009.
Yields on 30-year bonds (UST30Y 3.98, -0.03, -0.75%) also fell 2 basis points, down to 3.98%. They haven't closed below 4% since October.
The only U.S. data on Tuesday's calendar are reports on home prices and consumer confidence.
The shift during European and Asian stock trading hours also narrowed the gap between 2-year and 10-year note yields, a measure watched by bond traders as one indication of the outlook for economic growth and benchmark interest rates. A smaller gap between the yields flattens the so-called yield curve.
"Treasurys are higher and the curve is flatter this morning as global stock markets crater on fears of sweeping developed-world fiscal austerity," said strategists at RBS Securities. "The door is now open for a bull flattening that should take 10-year notes to 2.75%."
