The yield on the US 10-year treasury note fell to 2.34 percent in Asia, the lowest level since November 2017, bringing the month-to-date loss to 37 basis points.
The slide seen over the last few weeks could be associated with the growing evidence of an economic slowdown and dovish Fed expectations. The central bank signaled no rate hike for 2019 last week, giving the market what they have been pricing in since mid-to-late November.
The recent dovish turn by other major central banks may have added to the downside pressure on yields. The European Central Bank (ECB) delayed the rate hike to 2020 earlier this month, reinforcing fears of deeper economic slowdown in the Eurozone economy, the result being German 10-year yields drop below zero – the first since 2016.
The Reserve Bank of Australia ditched its long-held tightening bias in early February and the calls for rate cuts have only increased ever since. The latest to join the bandwagon is the Reserve Bank of New Zealand which surprised markets yesterday by stating that the next rate move could be to the downside.
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