(Bloomberg) -- Treasury 10-year yields dropped to the lowest in more than two years amid prospects for additional global monetary easing.
U.S. notes also gained for a second day as investors sought haven assets before a U.S. holiday Thursday and a raft of data this week including monthly payrolls numbers. Bonds rallied around the world after Bank of England Governor Mark Carney warned of downside risks to growth, and European Central Bank officials were reported to be discussing additional stimulus.
“A major driver of Treasury yields lower is a dovish shift of central banks, including the ECB and BOE,” said Hidehiro Joke, a bond strategist at Mizuho Securities Co. in Tokyo. “Ten-year yields may risk falling toward 1.70% as markets are very pessimistic” about economic growth, he said.
U.S.10-year yields slid as much as three basis points to 1.95%, the lowest since November 2016. They have declined from as high as 3.26% in October last year.
Traders are bracing for a slew of U.S. economic numbers being released Wednesday before the July 4 holiday. Data include durable goods orders, factory orders, and the ADP (NASDAQ:ADP) employment figures. Friday’s payrolls report may either reassure investors concerned about last month’s weak numbers, or validate suspicions the economy is faltering.
All of that could help determine whether the Federal Reserve will fulfill market expectations for monetary-policy easing at its July 30-31 meeting. Fed funds rate futures are pricing in more than a quarter point of cuts for that gathering, and some traders have speculated a half-point reduction may be on the table.
