March 6, 2020 / 4:42 PM / a month ago

TREASURIES-U.S. long-dated yields hit all-time lows as virus fears intensify

    * Strong U.S. jobs report fails to lift market sentiment
    * New milestones set across bond market
    * Coronavirus infections hit more than 100,000 globally

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, March 6 (Reuters) - U.S. Treasury prices surged on
Friday, pushing long-dated yields to fresh record lows, as
worries that the coronavirus outbreak will hammer the world
economy sent investors fleeing to assets seen as safe havens in
turbulent times. 
    A strong U.S. payrolls report did little to lift market
sentiment. Nonfarm payrolls increased by 273,000 jobs in
February, matching the prior month's tally, which was the
largest since May 2018. Data also showed that the economy
created 85,000 more jobs in December and January than previously
    But economic data was overshadowed by escalating market
panic over the coronavirus, which has infected more than 100,000
people globally, according to a Reuters tally. That number could
rise as more people get tested.
    "The collapse in Treasury yields is historic, but this last
decline was pretty easy as bond traders drove the 10-year down
to match economists' expectations that the Fed will deliver
another 50-basis point cut at the March 18th meeting," said
Edward Moya, senior market strategist, at OANDA in New York.
    Futures traders bet the Federal Reserve will slash U.S.
interest rates to near zero by April. New
milestones were set across the U.S. bond market, which has this
week seen some of its biggest moves in years. 
    The 10-year Treasury yield fell to a record low of 0.66%
 and was last down at 0.732%, on pace for its largest
daily fall since October 2011 during the depths of the euro zone
sovereign debt crisis.
    The 30-year Treasury yield dropped more than 25 basis points
to a record low of 1.208% and was last at 1.282%. It
was also on course for its biggest daily fall since late 2011 
    Short-dated U.S. Treasuries also racked up sizable moves,
with two-year yields falling more than 12 basis points to 0.394%
, their lowest since October 2014. They were last at
    Two-year yields have tumbled 89 basis points in the past two
weeks in their biggest two-week drop since 1987.
    "We think we haven't seen the bottom yet," said Tony
Rodriguez, head of fixed income strategy at Nuveen in
    He said investors were trading blind because it is hard to
gauge the risk the virus poses to the economy. 
    "Absent better news on the virus, they (Fed) will cut
(another) 50 basis points and get to zero over the next couple
of months," Rodriguez said.  
    The prospect of a prolonged global economic slowdown smacked
equity markets and with a weekend looming, investors headed for
the relative safety of government bonds. 
      March 6 Friday 11:31 AM New York/1631 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.44         0.4478    -0.177
 Six-month bills               0.3575       0.3631    -0.155
 Two-year note                 101-78/256   0.4608    -0.124
 Three-year note               102-136/256  0.5055    -0.110
 Five-year note                102-216/256  0.5449    -0.128
 Seven-year note               103-22/256   0.6714    -0.150
 10-year note                  107-96/256   0.7292    -0.196
 30-year bond                  117-200/256  1.2828    -0.287
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        12.00         5.00    
 U.S. 3-year dollar swap         8.75         4.00    
 U.S. 5-year dollar swap         9.00         3.00    
 U.S. 10-year dollar swap        4.25         4.50    
 U.S. 30-year dollar swap      -39.75         0.75    
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Karen Pierog in New York and Dhara Ranasinghe in London; Editing
by Steve Orlofsky and David Gregorio)
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