The number of the week? 68 bps is the cumulative change in the 10yr U.S. Treasury yield over the past 10 trading days, or since the close of trading on February 21st. During this time, we noticed a pattern: Yields tended to fall during non-U.S. market hours and were flat-to-up during U.S. market hours. In the overnight sessions during this 10-day period, yields fell 73 basis points (bps) and actually rose 5 bps during U.S. hours. As of this writing, it’s worth noting that the 10yr yield fell another 36 bps overnight.
To us this indicates foreign purchases of U.S. bonds, potentially as a hedge against a global growth slowdown due to the coronavirus. This behavior also distorts the signal that the plunge in yields may be sending. In other words, a recession may not be in the cards for the U.S. The fluidity of current events, including coronavirus containment efforts, make this a tough call. But as we did when the yield curve inverted last summer, again we’re cautioning reading too much into recent moves in U.S. interest rates.