Bond Report: Treasury yields slide as stocks reel in wake of Europe travel restrictions

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U.S. Treasury yields fell sharply on Thursday as the White House decision to impose a 30-day ban on travel from Europe to the U.S. sparked selling across global equities, spurring inflows into haven assets like government paper.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -17.95%   fell 12.2 basis points to 0.700%, while the 2-year note rate TMUBMUSD02Y, -28.40%   was down 7.1 basis points to 0.425%. The 30-year bond yield TMUBMUSD30Y, -13.03%   tumbled 9.7 basis points to 1.218%. Bond prices move in the opposite direction of yields.

What’s driving Treasurys?

Stocks sold off overnight after President Donald Trump announced a ban on travel from Europe to the U.S. by foreign nationals to stem the spread of the COVID-19 outbreak, adding to worries that the move could hurt cross-border economic activity. Analysts say the U.S. government will need to enact more aggressive and targeted fiscal stimulus measures to arrest the economic damage from the coronavirus epidemic.

Equity futures  indicate sharp losses at the open for Wall Street. The S&P 500 SPX, -4.89%   and the Nasdaq Composite COMP, -4.70%   could slip into bear-market territory on Thursday, joining the blue-chip Dow Jones Industrial Average DJIA, -5.86%  .

Investors are also turning their attention to the European Central Bank, amid questions of how monetary policymakers could help support economic growth and stem worries about a freeze-up of credit markets in Europe.

In U.S. economic data, weekly jobless claims and February producer prices are due for release at 8:30 a.m. ET

What did market participants’ say?

“Today is a ‘whatever it takes moment’ amid President Lagarde’s first serious test of her reign as ECB chief. It is not the moment for politics and a repeat of the rift between council members that overshadowed Draghi’s swansong last September,” wrote Kenneth Broux, a strategist at Société Générale.

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