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At one point the yield on the benchmark 10-year Treasury note dipped three basis points to 0.973% before rising in afternoon trading to around 1.04%. The benchmark rate broke the 1% threshold for the first time ever on Tuesday in the wake of an emergency rate cut by the Federal Reserve to offset the economic impact from the coronavirus.
The 10-year yield hit an all-time low of 0.906% in the previous session. The yield on the 30-year Treasury bond was lower at 1.612%, near its record low. Bond yields fall as their prices rise.
U.S. lawmakers on Wednesday to address the spread of the deadly coronavirus even as the Centers for Disease Control and Prevention reported that 129 cases had been identified in the U.S. The congressional spending proposal is more than three times the $2.5 billion President proposed last week.
That appeared to relieve some investors by midday trading, when bond yields began ticking higher and the 10-year edged back above 1%.
Still, rates have been under pressure in recent sessions. The Fed slashed interest rates by half a percentage point on Tuesday in between its policy meetings, the first such emergency cut since the financial crisis. The Fed was scheduled to next decide on rates on March 18.
Other major central banks have scheduled meetings in the coming weeks and could follow the Fed’s lead, including the European Central Bank, the Bank of England and the Bank of Japan.
“Expectations remain high for global central banks to follow the Fed’s lead and offer further accommodation via rate cuts and/or balance sheet growth,” Ian Lyngen, BMO’s head of U.S. rates, said in a note on Wednesday. “The US rates complex is close enough to the bottom of the range that we struggle to imagine the lows for this cycle have been established.”
The Bank of Canada on Wednesday announced a 50 basis point rate cut, more aggressive than the quarter point reduction expected.
According to the latest figures from the World Health Organization, at least 91,700 global cases of coronavirus infections have been confirmed with at least 3,100 deaths. Italy closed all schools and universities for two weeks as death toll in the country continues to rise.
Yields remained lower after economic data on Wednesday showed solid growth in U.S. services. The ISM non-manufacturing index rose to 57.3 last month, higher than the 54.9 anticipated. Meanwhile, ADP and Moody’s Analytics said private payrolls jumped by 183,000 last month, topping expectations.