Treasury yields fall after Fed cuts rates and launches new quantitative easing program

Treasury yields fell Sunday night after the Federal Reserve issued cut rates and launched a new quantitative easing program to soften the economic blow from the coronavirus outbreak.

The 10-year U.S. note yield was at 0.67% after ending Friday's session above 0.9%. The 2-year note yield traded at 0.296%. Yields move inversely to prices.

The Fed slashed rates to near-zero, their lowest level since late 2015. The central bank also announced a quantitative easing program of at least $700 billion.

"The Fed has acted now to try to get ahead of what likely will be terrible news on the spread of the virus, both inside and outside the U.S., over the next couple of weeks," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note. "The lesson of Hubei and Korea is that lockdowns and social distancing measures take two or three weeks to bring about a clear downshift in case trajectory, with deaths then following."

Sunday's announcements come less than two weeks after the central bank cut rates by 50 basis point to a range of 1% to 1.25%.

"The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States," the Fed said in a statement. Chairman Jerome Powell said on a call with reporters said the Fed has "plenty of room to adjust our policy" if needed. However, he added the central bank doesn't think negative interest rates are an " appropriate response here in the U.S."

More than 156,000 people have been infected by the coronavirus, data from Johns Hopkins University shows. In the U.S. alone, more than 2.900 have tested positive for the virus. However, that U.S. number is expected to rise sharply as more tests are carried out in the coming weeks.

Sunday's announcement was not well received in the equity futures market. Stock futures tumbled at the open, with contracts tied to the Dow Jones Industrial Average falling more than 1,000 points and reaching their downside limit.

"The main problem this time as to other market disruptions is the abrupt closure of economic activity," said Dan Deming, managing director at KKM Financial. "The speed of the impact to middle America, let alone the global community is relatively unprecedented."