10-year Treasury yields tumble toward post-Election Day lows as geopolitical tensions rise.
North Korea missile launch sparks global stock selloff.
U.S. Treasury prices jumped, driving yields early Tuesday to their lowest levels since late 2016 as renewed market fears following a North Korean missile test stoked a flight into assets perceived as havens.
The yield on the 10-year Treasury note TMUBMUSD10Y, -2.66% was down 4.6 basis points to 2.110%, and had hit a low around 2.09% earlier Tuesday. That’s the lowest since Nov. 11, just days after Donald Trump’s presidential election victory sparked a Treasury selloff that sent yields soaring, according to FactSet data.
Bond prices and yields move inversely.
The yield on the 2-year Treasury note TMUBMUSD02Y, -2.66% shed 2.8 basis points to 1.310%–its lowest since Aug. 23, while the yield on the 30-year Treasury bond was off 3.5 basis points at 2.716%, marking its lowest since June 26. The so-called long bond had been as low as 2.69%.
The fall in yields for government paper come after North Korea launched a ballistic missile over Japanese airspace, reviving the geopolitical fears that had rattled Wall Street amid testy verbal sparring between North Korean leader Kim Jong Un and Trump, who earlier this month threatened “fire and fury” against the Hermit Kingdom over its nuclear missile program.
“The world has received North Korea’s latest message loud and clear: this regime has signaled its contempt for its neighbors, for all members of the United Nations, and for minimum standards of acceptable international behavior,” Trump said in a Tuesday morning statement.
This recent missile launch was the first Pyongyang has fired over Japan’s main islands since 2009, and is the latest in a string of direct provocations, the most recent of which occurred a few days ago.
Seasonally low trading volumes also have left the market more sensitive to pronounced asset swings. August tends to be the most volatile and among the more lightly traded periods for stocks and bonds.
Other havens gained from the sense of uncertainty sparked by Pyongyang’s move. Gold futures were up 0.9% at $1,326.50 an ounce, hovering around the highest levels since September 2016, while currencies considered safe also strengthened against the dollar. The euro EURUSD, +0.4675% jumped through $1.20 for the first time since January 2015, and the dollar hit its lowest in four months against the Japanese yen, fetching USDJPY, -0.64% recently ¥108.48, down from ¥109.26.
In European fixed-income markets, the 10-year German bond TMBMKDE-10Y, -12.04% also known as the bund, saw yield of 0.33%, compared with 0.376% late Monday in New York.
Government bond yields also have been under pressure in the wake of flooding that has left billions of property damage and flooding in the Houston area caused by Hurricane Harvey, which has now been downgraded but continues to inundate the Gulf Coast with rain, disrupting energy production as it is set to wreak havoc of one of the epicenters of U.S. crude-oil refining.
Looking ahead, investors also will be watching the Case-Shiller house price index for June, which is due at 9 a.m. Eastern Time, followed by consumer confidence for August at 10 a.m. Eastern.