US Treasurys took a break from rallying on Thursday morning following a raft of upbeat economic data which painted a picture of a healthy consumer and a rebounding manufacturing sector.
Fast forward a few hours and yields were back to doing what they’ve done best in 2019 – falling precipitously.
US equities managed to eke out a gain on the day, but benchmark yields in the US extended declines on Thursday afternoon, diving to 1.473%, a new low for 2019. When 1.50% broke, futures volumes surged, with nearly 10k going off in just a 1-minute window.
We are now at the lowest since August of 2016.
“10-year Treasury yield touched 1.50% on the dot”, Bloomberg’s Katherine Greifeld wrote, marking the occasion with a tweet. “Aaaand it’s gone. Should’ve waited 30 seconds!!”, she exclaimed, seconds later.
Appetite for duration has been insatiable of late, and according to BofA’s latest rates and FX sentiment survey, 10-year USTs are the hedge of choice by a wide margin, over gold, SPX puts, and the yen. In this month’s survey, 47% of respondents chose USTs, versus 34% in July.
As the bank’s Stefano Pascale wrote in a Tuesday note, “investors have not been so worried about the future in the past thirty years”.
That assessment is based on the number of 1-standard deviation moves in any 9-month rolling period for a basket comprised of Treasurys, gold and the yen.
The “everything rally” is rapidly metamorphosing into one of the most spectacular safe-haven bids in recent memory.