Treasurys are on fire

Treasurys continued to rally on Thursday, sending yields closer to the lowest levels of the year.

Just ahead of the market open, the 10-year yield was down three basis points to 1.67%. In January, it fell to the lowest level since May 2013.

Treasurys and other government bonds have seen strong buying recently amid concerns about global economic growth and the upcoming British referendum. The German 10-year yield fell to a record low earlier this week.

Aaron Kohli, director of fixed income strategy at BMO Capital Markets, said in a note that the Bank of Korea’s surprise rate cut overnight to support its economy helped sustain the rally in treasurys.

“Already close to record low levels, the 10yr outperformance has been driven to some extent by buying by foreign investors as well as market mechanics and by a collapsing term premium,” or the extra yield investors need to hold long-term bonds instead of short-term ones, Kohli wrote.

The major US stock indexes opened lower following three straight positive closes that took the benchmark S&P 500 1% shy of a record high.

Near 9:32 a.m. ET, the Dow was down 53 points (0.30%), the S&P 500 was down 8 points (0.40%) and the Nasdaq was down 21 points (0.43%).

Crude oil prices also retreated. West Texas Intermediate crude futures in New York fell 1.8% to $50.28 per barrel. On Wednesday, WTI closed above $51 for the first time since last July.

The economic data flow is light all week. Initial jobless claims fell 4,000 to 264,000 last week.

At 12 p.m., the Federal Reserve will release its Z1 flow of funds, which includes household change in net worth in the first quarter.

Restoration Hardware shares fell about 17% near the open after the company on Wednesday cut its full-year outlook.

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