Treasury yields drop sharply as investors make a flight to safety of bonds
Treasury yields fell sharply on Friday as worries as the shutdown of Silicon Valley Bank sparked a flight to safer assets such as government bonds.
The 2-year Treasury note yield dropped more than 29 basis points to 4.609%. Earlier this week, it traded above the key 5% level. The benchmark 10-year note yield, meanwhile, fell nearly 22 basis points to 3.708%. Yields and prices move in opposite directions and one basis point equals 0.01%.
Regulators shuttered Silicon Valley Bank on Friday, after shares tumbled more than 60% on Thursday as the bank sought to raise more than $2 billion in capital to offset losses from bond sales. Prior to the shutdown, shares were down almost 63% premarket.
CNBC’s David Faber earlier reported that the bank was in talks to sell itself after attempts to raise capital failed, citing sources familiar with the matter. Rapid deposits outflows, however, are outpacing the sale process, complicating the ability to realistically assess the bank.
The news led to another day losses for the broader stock market, and traders searched as turmoil hit the regional banking sector.
In other news, nonfarm payrolls data for February rose more than expected, but the wage growth grew less than expected and unemployment ticked higher, adding credence to the argument that the job market was cooling a bit despite the better-than-expected payrolls number.
The Federal Reserve has been hiking interest rates in an effort to cool the economy, including the labor market, and ease inflation.
The data comes as investors consider the Fed’s next interest rate policy moves. Many are expecting the central bank to increase the pace of rate hikes again and announce a 50 basis point increase at its next meeting later this month.
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