US two-year yield is down 140 basis points on YTD basis

While the US two-year yield is currently trading six basis points higher than recently hit record lows, it is still down over 140 basis points on a year-to-date basis. 

The sharp losses could be associated with the coronavirus-led economic downturn and Federal Reserve's unprecedented stimulus-response. The central bank cut rates to 0.25% in March and has launched multiple stimulus lifelines ever since. 

At press time, the yield is sidelined near 0.15%, having hit a record low of 0.09% on May 8. The drop to single digits was caused by growing speculation that the US would implement negative rates by the end of the second quarter of 2021. 

However, Federal Reserve's President Jerome Powell, while speaking at an event on Wednesday, closed the doors to negative rates. The Fed chief reiterated that during an interview on “60 Minutes,” the CBS program over the weekend. However, Mr. Powell also said that both Congress and the central bank may need to do more to help the economy. 

Also, if the rally in gold, a zero-yielding safe-haven metal, is anything to go by, markets look convinced that the US would eventually push rates below zero. Gold is currently trading at $1,756 per ounce at press time, the highest level since November 2018. The metal is reporting gains for the fifth straight day, having found bids below $1,700 on May 12.