Summary
- It reported that concerns about distress in the U.S. private credit market have led investors to flock to U.S. Treasuries, a safe-haven asset, and gold.
- The 10-year U.S. Treasury yield fell to the lowest level of the year in the 3%% range, serving as a refuge for investors.
- Gold prices surpassed $4,300 per troy ounce to reach a record high, with a year-to-date gain of 65%%.
Gold price surpasses $4,300 per troy ounce
U.S. Treasury yields in the 3% annual range
Concerns about distress in the U.S. private credit market have increased, sending the 10-year U.S. Treasury yield down to the 3% annual range. Gold prices surpassed $4,300 per troy ounce, setting another record high.
According to financial information site Investing.com, as of 3 p.m. that day the 10-year U.S. Treasury yield stood at 3.945% annually. It fell 0.81% from the previous day. The yield, which had risen into the 4.5% range last April after the U.S. announced reciprocal tariffs, has fallen below 4%. This is the lowest level of the year.
Bloomberg News analyzed that "as concerns about recent loan defaults pushed down U.S. bank stocks, investors sought safe-haven U.S. Treasuries, causing bond yields to fall." Worries are growing that the Silicon Valley Bank (SVB) episode could recur as losses have widened, including a U.S. auto parts supplier that received funding via private credit going bankrupt.
Anna U, an asset strategist at U.S. investment manager VanEck Associates, said, "As credit deterioration in the U.S. financial sector increased uncertainty, a somewhat sudden reaction appeared," adding, "This U.S. Treasury rally is investors seeking a safe haven."
The recent rise in U.S. Treasury prices is also partly due to growing recession concerns as a U.S. federal government shutdown (temporary work stoppage) drags on. The possibility of further rate cuts by the U.S. central bank (Fed) has become more prominent. In the past, a prolonged shutdown has also acted to pull down Treasury yields. During the more-than-one-month-long shutdown in 2018, the 10-year U.S. Treasury yield fell by about 0.5 percentage points.
Gold, considered a representative safe-haven asset, also continued its rally. According to Reuters, on the 16th, Eastern Time, spot gold prices at one point surged more than 2.6% from the previous close to $4,318.75 per troy ounce, setting a record high. December-delivery gold futures on the New York Mercantile Exchange also closed up 2.5% at $4,304.60 per troy ounce. That day it rose to a record high of $4,335 before easing slightly. Bloomberg reported it was the largest weekly gain since 2020. Year-to-date, the price of gold has risen 65%.
Reporter Kim Ju-wan kjwan@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
