NEW YORK, Feb 3 — Treasury benchmark yields fell to within half a percentage point of a record low as interest rates plunged around the world, raising concern the move foreshadows a global economic slowdown.

US 10-year yields, used to set borrowing costs on everything from home mortgages to foreign sovereign bonds, dropped to 1.83 per cent. The all-time low was 1.38 per cent set in 2012.

Investors are rushing to the haven of sovereign bonds as oil prices and shares tumble. The Bank of Japan followed the European Central Bank in using negative interest rates to ward off deflation, and traders are cutting their forecasts for how much the Federal Reserve will raise US rates.

“Global bond yields are certainly predicting a global slowdown,” said Priya Misra, the head of worldwide interest- rates strategy in New York at TD Securities (USA) LLC, one of the 22 primary dealers that trade directly with the Fed. “We’ve taken this decline in oil to be very negative for risky assets and to imply that the Fed is not going to hike for now,” she said in an interview earlier this week.

The US 10-year note yield fell one basis point as of 10.54am in Tokyo, after tumbling 10 basis points yesterday, according to Bloomberg Bond Trader data. The price of the 2.25 per cent security due in November 2025 rose 1/8, or US$1.25 (RM10.55) per US$1,000 face value, to 103 23/32. The last time the yield approached the record low was in January 2015 when it dropped to 1.64 per cent.

Growth outlook

Japan’s five-year yield declined to a record low of negative 0.12 per cent.

Crude oil declined to a 12-year low in January, and the MSCI All Country World Index of shares has fallen more than 7 per cent this year. The odds of the Fed following its December rate increase with another in 2016 are less than 50 per cent, futures contracts indicate.

The International Monetary Fund cut its world growth outlook last month. The global economy will expand 3.4 per cent this year, down from a projected 3.6 per cent in October, the IMF said. — Bloomberg