The 10-year US Treasury yield closed in on a move below 1 per cent for the first time as fears over the long-term economic impact from the spread of the coronavirus deepened.

The yield, which moves inversely to price, on the 10-year Treasury dropped to a low of 1.03 per cent on Monday, before edging higher to 1.06 per cent. The 10-year Treasury is one of the most important interest rates in global finance, underpinning borrowing and savings rates across the globe.

Other US government bond yields were in freefall on Monday. The two-year yield dropped almost 17 basis points to 0.74 per cent, marking its biggest one- day fall since March 2009, having fallen below 1 per cent on Friday.

The moves lower reflected fears over slowing global growth and solidifying expectations that the Federal Reserve will be forced to cut interest rates in an attempt to support financial markets, following a more than 10 per cent drop in the S&P 500 since coronavirus concerns intensified at the beginning of last week.

Futures markets are pricing in at least one 0.25 per cent cut in the Fed’s target interest rate when the central bank meets this month, with some investors betting that it could cut rates by 0.5 per cent for the first time since December 2008.

Expectations of policy action were entrenched by the deep inversion between the three-month Treasury yield and two-year yield.

The three-month yield stood at 1.12 per cent, down from over 1.5 per cent at the beginning of last week. With the two-year more than 30 basis points lower, it reinforced expectations of interest rate cuts on the horizon.

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