30-Year Treasury Yield Falls to 4.12% Amid Surge in Safe-Haven Demand

The 30-year U.S. Treasury yield declined by 8 basis points to 4.12% in early trading, extending a downward trend that began last week. This marks the first time the benchmark has closed below 4.20% since November 2024, driven by heightened investor demand for long-term government securities. The decline coincided with a sharp rise in the yield spread between the 30-year and 10-year notes, widening to 127 basis points—a sign of increasing risk aversion across the yield curve. Market participants cited growing concerns over global economic fragility and escalating geopolitical risks as key catalysts for the flight to quality. Recent data showing a contraction in U.S. manufacturing activity and a slowdown in European industrial output contributed to the shift. Additionally, heightened tensions in the Middle East and uncertainty surrounding upcoming elections in several major economies have amplified safe-haven buying. The rally in long-duration debt has had ripple effects across financial markets. Yields on 10-year Treasuries fell to 2.85%, while the S&P 500 posted a modest 0.3% gain, reflecting a market divergence between fixed income and equities. Mortgage rates on 30-year fixed loans dropped to 6.45%, the lowest level since late 2024, signaling potential support for housing activity. Financial institutions and asset managers have adjusted their portfolios to reflect the changing risk landscape. Several large institutional investors reported increasing allocations to long-duration Treasuries, with one U.S.-based pension fund revealing a 15% increase in 30-year Treasury holdings over the past month.