By Alden Bentley
(Reuters) – Futures on safe-haven U.S. Treasuries jumped at the open Sunday night, implying Friday’s fall in ten-year Treasury note yields would continue as more states joined the shutdown of huge swaths of the American economy to contain the runaway spread of coronavirus.
By Sunday night, nearly one in three Americans were under orders to close up shop and stay home as the list of states imposing lockdowns expanded to include Ohio, Louisiana, Delaware, New York, California, Illinois, Connecticut and New Jersey.
U.S. Treasury Secretary Steven Mnuchin said on Fox News Sunday that the coronavirus economic relief bill being finalized by the U.S. Congress would include a one-time $3,000 payment for families and allow the Federal Reserve to leverage up to $4 trillion of liquidity to support the nation’s economy.
Mnuchin said the additional liquidity measures would allow the U.S. central bank to help a broad base of businesses to get through next 90 to 120 days.
A measure that would pump well over $1 trillion into the economy to help companies and unemployed workers faltered after it failed to get the necessary 60 votes in the 100-member Senate to clear a procedural hurdle after days of negotiations. Democrats and Republicans now move back to the negotiating table.
The CBOT contract on the U.S. 10-year note <TYcv1> was last up 31/32nd with an implied yield of 0.67 percent, closing back in on the 10-year’s record-low yield of 0.318% on March 9.
S&P 500 futures <EScv1> fell the maximum allowed limit after their open, halting trade as investors displayed a continued aversion to risk.
U.S. stocks have already fallen more than 30% from their mid-February peak as the pandemic has spread, with even the safest areas of the bond market experiencing liquidity stress in a market rout not seen since the 2008 financial crisis. Even so, the pain may not be over yet, analysts and portfolio managers told Reuters on Sunday.
“This is a biological event,” said Nela Richardson, investment strategist at Edward Jones in St. Louis. “The market is a mere symptom of the global pandemic.”
(Reporting by Alden Bentley; Additional reporting by Andrea Shalal and Susan Heavey in Washington; April Joyner, Jonnelle Marte and Barbara Goldberg in New York. Editing by Daniel Wallis and Diane Craft)