Treasury yields declined again as the Federal Reserve’s concerns about a global growth slowdown fueled demand for safe investments.
While stock markets opened sharply lower, the Treasury market rallied in the wake of policy makers’ concerns, voiced Thursday, and their lowered interest-rate forecast for the long run.
Long-term Treasury yields were trading near their lowest levels since early September, while short-term yields fell to their lowest point since late August. Treasury yields fall when prices rise and vice versa.
The yield on the two-year Treasury note TMUBMUSD02Y, +2.42% skidded 6.7 basis points Friday to 0.678%, after posting on Thursday its largest one-day drop in over five years.
Among longer maturities, the yield on the 10-year benchmark Treasury note TMUBMUSD10Y, -1.13% slumped 6.7 basis points to 2.151% on Friday, after posting its largest one-day decline in over a month on Thursday. Meanwhile, the 30-year bond TMUBMUSD30Y, -1.31% yield tumbled 7.6 basis points to 2.960%.
Yields had spiked in the couple of sessions before the Fed’s decision on Thursday to leave interest rates unchanged, particularly in the short-term maturities that are most sensitive to changes in the Fed-funds rate. So many portfolio managers “rushed to buy Treasurys right after the Fed’s decision and take advantage of that extra income in higher yields,” said Mary Talbutt, head of fixed income at Bryn Mawr Trust.