On Tuesday, Asian shares extended losses amid fears the corona-virus was rapidly mutating into a pandemic that could cripple global supply chains and wreak far greater economic damage than first thought. Sovereign bond yields dived as investors sought the most liquid of safe havens and wagered central banks would have to ride to the rescue with a burst of new stimulus.
Italy reported more than 220 cases of the virus, with five deaths as of Monday morning. South Korea confirmed 231 cases, taking the total in the country to more than 830. Iran, meanwhile, confirmed 61 total cases, with 12 deaths nationwide.
Central banks across Asia have already been easing policy, while governments have promised large injections of fiscal stimulus, something western countries might have to consider.
The rush to bonds drove yields on 10-year Treasury notes down 10 basis points to 1.37%, so paying less than a three-month deposit. Yields are now rapidly approaching the all-time low of 1.321% hit in July 2016.
The U.S. dollar gave up early-day gains, pressured by growing investor expectations the Fed could deliver a rate cut sooner rather than later to cushion the impact from the corona-virus outbreak. The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.06% to 99.18.
PBOC fixes YUAN reference rate at 7.0232 PER DOLLAR (prev fix 7.0246 ; prev close 7.0276). PBoC Keeps Neutral Position In Open Market Operations.
Oil rose on Tuesday as investors snapped up bargains after crude benchmarks dropped almost 4% in the previous session, but fears that the spreading corona-virus could wreak far greater economic damage than initially thought capped gains.
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