US 10-year Treasury yields extend slump toward 1.60% – USD follows

US 10-year Treasury yields have hit a low of 1.615% – the lowest since October 2016. The rush into the safety of global bonds has come as a response to the intensifying tensions between the US and China. 

The Chinese authorities have continued fixing the yuan lower in what as seen as a response to new US tariffs announced by US President Donald Trump. Moreover, central banks in New Zealand and India have lowered interest rates.

The downfall of US 10-year bonds – the global benchmark – is weighing on the US dollar which is retreating across the board.

EUR/USD is trading around 1.1220 and USD/JPY has dropped below 105.80. Commoditiy currencies – including the New Zealand dollar which has suffered a shock rate cut of 50 basis points – are also recovering.