NEW YORK — Investors stampeded into US government bonds Thursday, driving the interest rate on the 10-year Treasury note as low as 1.54 percent, a record.
People were fearful the US economy might be hitting the skids at the same time as Europe’s situation is deteriorating and the economies of China and India are slowing.
When investors want to protect their portfolios they tend to plow money into US government bonds.
The record low rate beat the previous mark of 1.55 percent, set in 1945, just after the end of World War II, when government price controls kept interest rates artificially low.
Investors were already on high alert after learning on Wednesday that Spaniards were pulling billions of deposits out of their banks, which could lead to larger bank runs and unhinge an already fragile debt situation in Europe.
On Thursday, yield on the benchmark 10-year note fell as low as 1.54 percent in the morning and ended the trading day at 1.56 percent, still sharply lower than 1.62 percent the day before.