Oil Price Declines Roil Global Markets

“Oil prices tumbled by roughly 20% on the prospect of a Saudi-led energy glut, hammering global shares and fueling a fresh surge in demand for Treasurys and other safe assets. U.S. stock futures fell by the maximum 5% allowed in a single session,” the Wall Street Journal reports.

“Investors were responding to Saudi Arabia’s decision to cut most of its oil prices and boost output, despite existing threats to demand from the coronavirus epidemic. Trading in futures tied to the S&P 500 was limited for the first time since shortly after President Donald Trump won the U.S. election in 2016.”

“U.S. government bonds, which have already rallied to unprecedented highs, extended gains. The yield on the benchmark 10-year U.S. Treasury note fell 0.239 percentage points to 0.529% and the equivalent 30-year yield declined to 1.028%.”

Bloomberg: “The entire Treasury yield curve tumbled, trading below 1% for the first time in history as investors grappled with the worst global crisis in more than a decade. A drop to 0% is now priced in swap markets.”