Global bond market review: Bond yields hit record lows

Global bond yields extended their January declines into February as investors became increasingly worried about the potential economic impact and human cost of the coronavirus. As the virus continued to spread and intensify around the world, investors focused on the perceived “safe havens” of assets such as government bonds and gold.


  • The ten-year Treasury bond yield hit its lowest level since 1962
  • The 30-year Treasury bond yield fell to a 43-year low
  • Demand for fixed income funds rose sharply in January as coronavirus began to spread

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Global bond yields extended their January declines into February as investors became increasingly worried about the potential economic impact and human cost of the coronavirus. As the virus continued to spread and intensify around the world, investors focused on the perceived “safe havens” of assets such as government bonds and gold.

“The US yield curve inverted to its most negative point since October 2019”

During February, the yield on the benchmark US Treasury bond fell from 1.51% to 1.15% , reaching its lowest level since 1962. Meanwhile, the yield on the 30-year Treasury bond ended the month at 1.68%, representing its lowest level for 43 years. The US yield curve inverted to its most negative point since October 2019, reflecting investors’ pessimism over the economic outlook. Elsewhere, the benchmark German government bond yield fell from -0.64% to 0.72% during February, and the yield on the benchmark French government bond declined from -0.47% to -0.54% .

The coronavirus poses a significant risk to global credit conditions, according to S&P Dow Jones Indices , which believes that disruption to trade, to the flow of people, and to global supply chains, alongside lower commodity prices, will have a widespread impact, particularly in Japan and the rest of Asia, with Hong Kong and Singapore expected to be particularly hard-hit. In Europe, the effects of interruptions to European value chains are likely to be exacerbated by low inventory levels, and Germany is regarded as especially vulnerable to disruption. In the US, the economy is likely to be affected by lower demand from China, and interruptions to travel and tourism. Above all, however, the outlook remains highly uncertain, and questions remain over the length, extent and impact of the outbreak.

Fixed income funds were the most popular amongst UK retail investors during January, according to the Investment Association (IA) , notching up £1.7 billion in net retail sales – more than three times more than in January 2019. Demand was fuelled by concern over coronavirus. Global Bonds was the second most popular IA sector during the month with net retail sales of £358 million, followed by £ Corporate Bonds on £309 million. £ High Yield and Global Emerging Markets Bond also figured in the top-ten most popular IA sectors. In contrast, the least popular sector during January was UK Index Linked Gilts, which experienced a sharp drop in demand, posting outflows of £161 million during the month.


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