US Treasuries gain as investors seek refuge in safe-haven assets amid troubled markets

The US Treasuries surged across the curve on Wednesday as investors continue to seek sovereign debt as a shelter on the back of hushed stocks and tumbling crude oil prices. Also, investors await 30-year note auction, scheduled to be held at 17:00 GMT.

The yield on the benchmark 10-year Treasury note fell nearly 4 basis points to 1.476 percent and the yield on short-term 2-year note dipped more than 1 basis point to 0.673 percent by 12:40 GMT.

Coming off the tails of last Friday’s employment report, the start to the week has been relatively mild with little in the way of significant data.

On Tuesday, the May US wholesale inventories report revealed an overall increase of +0.1 percent m/m, versus the revised +0.7 percent m/m reading that occurred in April (previous was +0.6 percent m/m). This comes in just below market expectations for a +0.2 percent m/m result.

Moreover, St. Louis Fed President James Bullard reiterated that only one interest rate hike will be needed for the foreseeable future. Sponsored by his view that the US is in a persistent period of low growth, low inflation, and low unemployment, Bullard argues that the policy rate would likely remain essentially flat over the forecast horizon to remain consistent with the current regime.

Today, crude oil futures fell as investors took gains after oil prices surged nearly 5 percent in the previous session, partly on the back of a forecast increase in demand next year.

Also, a surprise build in U.S. crude stocks and a stronger U.S. dollar which gained on Wednesday against a basket of currencies weighed on oil prices. The International benchmark Brent futures fell 1.20 percent to $47.88 and West Texas Intermediate (WTI) tumbled 0.90 percent to $46.38 by 12:40 GMT.

Markets now look ahead to import prices, Beige Book and Treasury budget statement releases on Wednesday, accompanied by a 30-year bond reopening. In terms of Fed commentary, more of the same was seen from St. Louis Fed President Bullard with his significantly revised outlook for only one rate hike for the foreseeable future, citing a continued slow growth environment.

Meanwhile, the S&P 500 Futures rose 4 points to 2,149.75 by 12:40 GMT.