The cratering oil price sent markets into turmoil on Monday, as fears of an all-out oil price war and the ongoing coronavirus outbreak combined for a perfect storm of bad news. After stock markets from Germany to Japan had suffered steep sell-offs throughout the day, all three major indices in the U.S. tanked at the open, triggering a circuit breaker that halts trading for 15 minutes to keep stocks from falling through the floor.
Already on red alert due to the coronavirus epidemic, investors turned to safe havens, pushing the price of gold to a seven-year high and squeezing the 10-year Treasury yield to new lows. As of 10:00 AM EDT, the yield for 10-year Treasury bonds stood at 0.49 percent, up from a historic intraday low of 0.32 percent.
As of this writing, the entire yield curve for U.S. Treasury bonds, i.e. yields for bonds with maturities ranging from 1 month to 30 years, is below 1 percent for the first time in history, indicating that investors are expecting the Fed to cut rates to zero in the coming months.