U.S. Treasury yields were sharply lower on Friday as investors ran for cover in the middle of a stock market sell-off, while concern over the health of the economy grew.
The 10-year Treasury yield dropped about 7 basis point to 4.427%, and the 2-year Treasury yield was lower by more than 6 basis point at 4.202%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
The S&P Global Purchasing Managers’ Index for manufacturing came in at 51.6 for February. That was below a consensus estimate from Dow Jones that called for 52.8. Services, meanwhile, contracted for the month.
The University of Michigan’s consumer sentiment index also fell more than expected in February, while existing home sales fell in January.
Friday’s drop in yields came alongside a steep sell-off in equities, which gained steam as the day advanced. The Dow Jones Industrial Average dropped more than 700 points, its worst day of the year.
“Another fresh round of data releases reflecting a slowing economy is weighing on stocks and generating bull-flattener movements across the yield curve. More specifically, investors are embracing the long end of the Treasury complex due to the possibility that the strongest economic reports of the current cycle are behind us, incentivizing traders to lock in those rates before they potentially drift south,” Jose Torres, senior economist at Interactive Brokers, said in an email.
Correction: Manufacturing PMI came in at 51.6 for February. A previous version misstated the month.
