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US Treasurys rally as investors rush to ‘safe havens’ following Brexit vote

Katy Barnato
US Treasurys rally as investors rush to ‘safe havens’ following Brexit vote

U.S. Treasury notes leaped on Friday a strong "safe-haven" bid after the results of the U.K. referendum on European Union (EU) membership stunned global markets.

The U.K. people voted by 51.9 percent to quit the 28-country union, shocking markets that had priced in a win for "remain."

Benchmark 10-year Treasury notes (U.S.:US10Y) rallied to yield 1.5702 percent Friday, having closed the previous trading session at 1.74 percent. The benchmark yield also hit a low of 1.4006, its lowest level since July 26, 2012.

Two-year notes also surged, last yielding 0.6407 percent, after hitting its lowest level since April 2015.

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Thirty-year bonds (U.S.:US30Y) rallied to yield 2.4229 percent, down from 2.56 percent. The price and yield of a bond move inversely.

"Market reaction has been predictable, inevitable and damaging," Grant Lewis, head of research at Daiwa Capital Markets Europe, said in a note on Friday.

At around 3:30 a.m. ET on Friday, U.K. Prime Minister David Cameron, who campaigned for "remain," announced his intention to resign by October.

U.K. Gilts (:GB10Y-GB) gained, with 10-year notes rallying to yield 1.084 percent, down from a close of 1.38 percent.

German bunds — a so-called safe haven asset akin to Treasurys — also rallied, with 10-year notes (Germany:DE10Y-DE) back in negative territory, yielding -0.04 percent.

Sterling (Exchange:GBP=) fell against the U.S. dollar to trade at $1.365, down from $1.488 percent in the previous trading session.

On the data front, U.S. durable goods fell 2.2 percent in May, versus a 0.5 percent expected drop.

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