Bonds Come Back in Vogue as a Hedge Against Cratering Stocks

Government bonds staged a sweeping rally on Thursday, with US Treasuries gaining momentum as a growing sense of angst over the health of the global economy pummels stock markets.

Treasuries gained for a second day as investors sought out the safest debt, driving the 10-year yield down 11 basis points to 2.77%, it’s lowest level since late April. Weaker than forecast US jobless claims and a sharp decline in a regional Philadelphia Fed survey spurred a burst of buying in Treasuries, with equities futures indicating that stock prices will open lower.

German 10-year bund yields retreated 10 basis points back below 1%, while in a sign of nervousness, the spread between 10-year notes and their swap counterparts rose the most in almost two weeks. Italian bond prices also climbed.