Investors are turning towards the safety of US Treasury’s as investors’ dumped stocks and commodities as new fears of a global recession enveloped the global economy. Treasury yields slipped to historic lows with the 10-year yielding 1.75 percent and the 30-year at 2.86 percent. The dollar was also a beneficiary of a massive fear trade that sent the  US stocks sharply lower, on the back of steep sell-offs in equities markets around the globe.

Base metals, including copper, hit by concerns of a Chinese slowdown, tumbled 7 percent to a 1-year low. Crude Oil prices were also hit hard by the weak global outlook plunging to USD 79.66 per barrel, lowest in a month.  The surprising part of the story is it isn’t gold that the people are turning to in times of financial strife. The bullion has in fact decreased to a lowest value of USD 1720.20 per ounce yesterday. It isn’t any other precious metals either. Investors are flocking to the risk-free assets-US Treasury’s- at a time of extreme concern about risk, and Treasury’s continue to rise in this regard.

The selling in risk assets gathered momentum after the Fed’s statement on Wednesday, in which it characterized risks to the economy as significant and noted that strains in global financial markets could be a catalyst. This coupled with the announcement of a moderating growth in the preliminary Chinese manufacturing growth, drove equities market southwards.

The lack of resolution on Europe, however, remains the biggest culprit as investors worry the exposure of European banks to the sovereign crisis will spark a global banking crisis. The EU, IMF and ECB postpone their decision until October to determine what will be done about the next payment to Greece, without which it will default. Investors are disappointed with the lack of bigger plan of European leaders to solve the brewing crisis.

The US Treasury’s have gathered momentum as a result of huge-scale immigration from the equity markets towards the bond markets. The risk-free assets are benefiting from the weak global outlook. At the time of this blog, the US 10-year Treasury Note and 30-year Treasury Bond were trading at 131.52 and 145.77. The normalcy of the matter would be to expect the rates to go even higher in the days to come.