By Matt Wirz
U.S. government bond yields rose Wednesday to cap a day of wild swings, whipsawed by an auction of 10-year notes, concerns about liquidity and investors' fears about economic damage from the spread of the coronavirus.
The yield on the benchmark 10-year Treasury note fell as low as 0.643% in early trading, according to Tradeweb. It then jumped as high as 0.860% following an auction of 10-year notes, dropped again and eventually settled at 0.817%, up from 0.743% at Tuesday's close. The move wrapped up the biggest two-session climb for the 10-year yield since January 2009.
The midday jump coincided with Wednesday's auction of 10-year notes, which were still sold at their lowest yield on record. The timing suggests investors were preparing for the influx of supply into the market, some analysts said.
Often, when stock prices fall, investors flee toward less-risky investments. But as stocks moved sharply lower Wednesday, the move higher in yields suggested some decoupling between the two markets.
"Bonds are looking past stocks today and will continue to unless the S&P 500 takes a hard run under 2750," said Jim Vogel, an interest-rate strategist at FHN Financial, in a note. In a separate report, Mr. Vogel said that the bond market is getting better accustomed to sudden and overly sensitive swings in equities.
Some analysts said violent price swings this week were being driven by uncertainty surrounding the coronavirus, which has led to traders' experiencing difficulty finding desired prices. Wednesday's high yield of 0.860% comes just two days after the 10-year yield dropped below 0.4% in intraday trading.
The yield on the 30-year Treasury bond has also swung widely, settling Wednesday at 1.305%, after falling below 1% Monday and closing Tuesday at 1.217%.
As new headlines come out, investors can expect Treasurys to move significantly in either direction, depending on the substance of reports, said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co.
"I don't think all the information is out, so I think there's a potential significant move in either direction depending on what we see, " said Milstein. "If we get a strong stimulus from Washington and we don't get the spread we've seen in Italy, rates could go up to 1% on the 10-year."
--Matt Wirz contributed to this article.
Write to Matt Wirz at firstname.lastname@example.org