June 3, 2019 / 8:08 AM / 4 months ago

TREASURIES-US bond rally accelerates, 2-yr yield in biggest 2-day fall since 2008 crisis

June 3 (Reuters) - U.S. Treasury bonds extended their rally on Monday, with yields on two-year notes seeing their biggest two-day fall since early-October 2008, when the global financial crisis was kicking off.

Ten-year yields slumped six basis points to 2.08%, the lowest since Sept 2017 while two-year yields slumped nine bps to 1.842%.

The 2-year yield is down 23 bps in the past two sessions, reflecting growing conviction that the U.S. Federal Reserve will start cutting interest rates to stave off recession as the trade shows signs of escalating further and enveloping more countries.

In what iss widely accepted as a recession signal, 10-year yields have been firmly above 3-month note yields and the inversion in the yield curve has become more pronounced and is now approaching 30 bps.

“The trade war is taking another leg higher which is negative in terms of global growth, demand, confidence and inflation and is also injecting a healthy dose of risk-off, which is all conspiring to push U.S. yields lower,” Richard McGuire, head of rates strategy at Rabobank, said. (Reporting by Sujata Rao and Virginia Furness; editing by Abhinav Ramnarayan)

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