Turmoil in the banking sector sparked a furious rally in government bonds Monday, with yields on some shorter-term Treasurys collapsing half a percentage point in hours.
Worries about inflation that had pushed some
bond yields to multiyear highs less than a week ago gave way to new fears that problems with regional banks could damage the economy with speed that shocked investors. That shift unleashed a flood of cash to Treasurys, momentum that some analysts said was turbocharged by traders positioned for higher interest-rates buying bonds to close out their positions, along with others rushing to join the rally.
