As the global economy breaks down, investors invest money in long-term US bonds. The profitability of the 30-year Treasury fell to 2.06%, the lowest level in history.
Government bonds – in particular US Treasury bonds – are classic safe harbor assets that investors like to have in their portfolios when they are worried about the economy. In contrast, stocks are more risky assets that are usually more volatile during an economic downturn.
Here's what it all means: Typically, long-term bonds pay more than short-term bonds, because investors demand more money to tie their money for a long time. But this key "yield curve" reversed on Wednesday. This means that investors are afraid of short-term prospects for the US economy. Bonds and income go in opposite directions, so income decreases when investors buy bonds.
Part of the yield curve was reversed for several months. In March, for the first time since 2007, the profitability of a 3-month treasury bill exceeded the rate of a 10-year treasury bill. But on Wednesday, for the first time in more than a decade, the "main" yield curve – 2 year / 10 years ratio – reversed.