US Bond Yields Fall on Safe-Haven Demand

U.S. government bond yields fell on Friday as investors flocked to the safety of U.S. debt. Concerns about the strength of the global economy, triggered by weaker-than-expected economic data releases, prompted the move.

Economic Data Weighs on Sentiment

Data released earlier in the day showed a contraction in Eurozone economic activity, adding to worries about the region’s debt crisis. Simultaneously, Chinese manufacturing data indicated a slowdown in the world’s second-largest economy.

These reports led investors to reduce their exposure to riskier assets, such as stocks and corporate bonds, and increase their holdings of U.S. Treasuries.

Yield Curve Flattening

The yield on the benchmark 10-year Treasury note fell to 1.95%, while the 30-year bond yield declined to 3.12%. Shorter-term Treasury yields also decreased, resulting in a flattening of the yield curve.

A flattening yield curve is often seen as a sign of economic uncertainty, as investors anticipate slower growth and lower inflation in the future.

Safe-Haven Demand Persists

Analysts expect safe-haven demand for U.S. Treasuries to remain elevated in the near term, as global economic uncertainties persist. Geopolitical risks and ongoing concerns about the Eurozone debt situation are also likely to support demand for U.S. government bonds.