Bond Report: Treasury yields tick lower as coronavirus cases in U.S. surpass China’s tally

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Treasury yields fell on Friday as investors remain focused on the COVID-19 disease, with cases in the U.S. for the first time outpacing China’s tally.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -11.46%   fell 5.4 basis points to 0.754%, while the 2-year note rate TMUBMUSD02Y, -14.03%   was virtually unchanged at 0.265%. The 30-year bond yield TMUBMUSD30Y, -7.76%   slumped 5.4 basis points to 1.342%.

What’s driving Treasurys?

Coronavirus cases in the U.S. surpassed the total in China, the epicenter of the pandemic, while other Western countries like Italy have yet to reach the peak of the contagion. The rapid spread of the coronavirus is rattling investors who hoped to have a clearer timeframe for when the disease would be brought under control.

See: COVID-19 case tally: 542,788 cases, 24,361 deaths

At the same time, many have taken solace in the extensive measures deployed by governments and central banks to cushion the damage wrought by containment measures to keep the coronavirus in check.

The U.S. House is expected to pass on Friday a $2 trillion fiscal stimulus package, which will be given to President Donald Trump to sign. The bill would hand cash to U.S. households suffering from job losses as the nation goes into lock down.

The economic stimulus hopes have boosted equities this week, though the U.S. futures for the S&P 500 SPX, +6.24%   and the Dow Jones Industrial Average DJIA, +6.38%   were lower before the start of the trading session.

Traders will also get a snapshot of U.S. consumer health before the virus outbreak. The Conference Board’s consumer confidence index for March is due at 10 a.m.

The Federal Reserve reported its balance sheet had hit a record of $5.3 trillion on Thursday as the central bank steps in to try to keep credit flowing in all corners of the financial market, including Treasurys, commercial paper and mortgage-backed bonds.

Read: China will emerge from the coronavirus crisis stronger than the U.S., experts warn

What did market participants’ say?

“There is one critical element missing that prevents us from adopting even the most cautiously optimistic view and declaring that the worst is over for the markets: coronavirus peak. Global cases continue to rise and exceeded half a million with over 24 thousand total deaths,” said analysts at Rabobank.

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