Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Government Bond Yields Mirror Rise And Fall In COVID Concerns With Omicron Variant

By Investing.com (Darrell Delamaide/Investing.com)BondsNov 30, 2021 07:51
uk.investing.com/analysis/government-bond-yields-mirror-rise-and-fall-in-covid-concerns-with-omicron-variant-200503677
Government Bond Yields Mirror Rise And Fall In COVID Concerns With Omicron Variant
By Investing.com (Darrell Delamaide/Investing.com)   |  Nov 30, 2021 07:51
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The benchmark 10-year Treasury note has become a barometer of COVID fears, yo-yoing as concern rises and drops.

10-year Treasury Weekly
10-year Treasury Weekly

On Friday, the yield on the 10-year fell below 1.5% as the Dow crashed amid worries about the Omicron variant. On Monday, the yield rose again, moving above 1.5% as concerns faded and equity markets recovered.

The plunge on Friday was more than 15 basis points, while the rise on Monday was less than 5 bps, so investors clearly remain uneasy about the impact of the new coronavirus strain. Also, the string of mutations is itself unsettling as scientists cannot immediately say how effective vaccines are in warding off these infections.

Yield on the 30-year Treasury bond also plunged on Friday, but gained about 3 bps on Monday to about 1.86%.

Friday’s reaction was undoubtedly tinged with panic in what is historically a day of thin trading coming after the Thanksgiving holiday. Even as the alarm ebbed on Monday, however, uncertainty dampened the optimism of recent weeks about a robust economic recovery.

End-of-month positions and anticipation of the US jobs report on Friday will keep investors cautious. For the moment, the 1.5% level on the 10-year yield seems to be the dividing line between optimism and pessimism.

Some Central Bankers Downplay Potential Damage

The knee-jerk reaction of governments to impose travel bans may not lead inevitably to new lockdowns, and some officials are already ruling that out. Research on vaccine effectiveness is likely to take at least a couple of weeks and there will be some volatility as reports come in.

Some analysts expect what they call light lockdowns to be in store. Densely populated Europe has demonstrated considerable vulnerability to waves of infection, and political pressure is already building for renewed restrictions. Swiss voters approved the government’s COVID restrictions with a solid majority of more than 60% in a Sunday referendum.

Initial reports indicate that even though the new variant is highly transmissible, vaccines do provide some protection and symptoms have been mild. These reassurances allowed investors to temper the risk-off panic from Friday.

Some central bankers were quick to downplay the impact of Omicron. French central bank governor François Villeroy de Galhau, a member of the European Central Bank’s governing council, said on Monday successive waves of COVID have proven to be less and less damaging.

His remarks echoed those of Raphael Bostic, head of Federal Reserve regional bank in Atlanta, who on Friday said variant strains have also declined in lethality.

But Fed Chairman Jerome Powell was more cautious in prepared remarks for congressional testimony on Tuesday, saying

“the Omicron variant of COVID-19 and a recent uptick in coronavirus cases pose a threat to the US economy.”

German 10-year Weekly Chart
German 10-year Weekly Chart

The yield on Germany’s 10-year bond, which serves as a benchmark for the European Union, remained low at minus 0.3150 late Monday, after plunging from minus 0.2525 on Friday and edging up yesterday.

The heads of Germany’s 16 states are pressuring caretaker Chancellor Angela Merkel and Chancellor-designate Olaf Scholz to apply uniform COVID restrictions across the country as the constitutional court is set to rule on Tuesday on implementation of the so-called emergency brake of restrictive measures.

Government Bond Yields Mirror Rise And Fall In COVID Concerns With Omicron Variant
 

Related Articles

Jeroen Blokland
Bond Yields - Daily Sketch By Jeroen Blokland - Feb 16, 2021

Today’s Daily Sketch is again devoted to the outlook for bond yields. A couple of days ago I pointed out that the yield curve could steepen further. Today’s chart shows the nominal...

Government Bond Yields Mirror Rise And Fall In COVID Concerns With Omicron Variant

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Puk Pups
Puk Pups Nov 30, 2021 9:39
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What to play after Omicron? How to scare people more ?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email