U.S. Treasury bonds also jumped as investors sought to safeguard their wealth and play a potentially dovish Federal Reserve outlook in the wake of the increased uncertainty. Yields plunged across maturities as demand rose for U.S. government debt, with benchmark 10-year Treasury notes yielding 1.58%.
“The Fed is on indefinite hold – it’s an infinite extension,” James Camp, director of fixed-income with Eagle Asset Management, told Bloomberg. “We will see Treasuries continue to stampede to 1.25 percent, maybe 1 percent. It may happen over the next quarter. We’ve got a massively dislocating moment, and what are central bankers going to do, and do they have any bullets left?”
Long-term Treasury ETFs outperformed Friday, with the iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) up 2.6%, PIMCO 25+ Year Zero Coupon US Treasury (NYSEArca: ZROZ) 3.7% higher and Vanguard Extended Duration Treasury ETF (NYSEArca: EDV) up 3.6%.
In the currency market, the Japanese yen strengthened on safe-haven demand, with the USD trading as low as JPY99.99. Meanwhile, the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) gained 3.5% Friday.
Lastly, the CBOE Volatility Index bounced on the mounting market fear. The VIX surged 43.5% to 24.8. Meanwhile, the REX VolMAXX Long VIX Weekly Futures Strategy ETF (BATS: VMAX) gained 30.0%, iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) rose 24.7% and ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) increased 24.8%, with the VIX now hovering around 20.9, its highest level since February.
Related: VIX, Bearish S&P 500 ETFs to Hedge Uncertainty
“They’re a very easy way to hedge a portfolio that might be net long,” Matt Lloyd, chief investment strategist at Advisors Asset Management, told Bloomberg.
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