Yields on U.S. government bonds reached fresh multimonth lows on Wednesday, reflecting investors’ anxiety about the economic outlook and new concerns about the highly contagious Delta variant of Covid-19.
In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 1.313%, according to Tradeweb, compared with 1.369% on Tuesday.
Yields, which fall when bond prices rise, have been trending lower for months, dragged down by investors reassessing their more optimistic economic forecasts amid signs that Congress and the Federal Reserve might not provide quite as much stimulus as previously anticipated. Underwhelming economic data has added to those concerns, along with new data from Israel suggesting Pfizer Inc . ’s vaccine is less effective at protecting against infections caused by the Delta variant.
On Wednesday, yields edged lower overnight before dropping steeply near the start of U.S. trading. That resembled their moves on Tuesday following the three-day holiday weekend.
Investors and analysts this year have put forward very optimistic forecasts for economic growth and inflation, said Subadra Rajappa, head of U.S. rates strategy at Société Générale. Now, she said, “The market is sort of taking a deep breath and saying, ‘Are those optimistic forecasts actually achievable?’”