(Bloomberg) -- Based on one metric, markets are in the throes of the biggest flight to safety in decades.
Treasuries, gold and the Japanese yen are clocking “the largest number of outsized rallies” combined since at least 1990, according to Bank of America Corp. The latest milestone in the haven frenzy arrived this week, when the yield on 30-year U.S. Treasuries slipped below 2% for the first time.
“Investors have not been so worried about the future in the past thirty years,” BofA strategists led by Stefano Pascale wrote in an Aug. 13 note.
The Treasury rally eased on Thursday after retail sales data boosted confidence in U.S. consumption, though 10-year yields still slipped by one basis point as of 9:52 a.m. in New York.
The charge into havens this month has been spurred by flashing recession indicators, trade-war tit-for-tat and data disappointments -- all amid thin liquidity. Gold is up about 18% this year, while the yen is the top performer against the dollar across G-10 currencies.
Bank of America’s metric measures the combined number of extreme moves among a basket of traditional havens over rolling nine-month periods.
With the U.S. long-bond future ripping more than 5% above the 50-day moving average, Justin Walters of Bespoke Investment Group LLC notes that historically “more often than not, bonds reverse lower” from here.
Former Federal Reserve Chairman Alan Greenspan said this week that he wouldn’t be surprised if U.S. bond yields turn negative.
“When these type of headlines pop up, it tells us that sentiment is getting too extreme,” Walters wrote in an Aug. 14 note.
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