U.S. Treasury yields plunged on Tuesday as concerns around the COVID-19 outbreak sent stocks swooning and government bonds rallying, with the 10-year benchmark yield falling to its all-time low.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -2.55%  fell 4.9 basis point to 1.328%, its lowest close in history. The benchmark rate fell as low as 1.31%, below its previous all-time intraday low of 1.325% set on June 2016.

The long-dated maturity is widely watched by economists and investors as it serves as broader barometer for economic growth and inflation expectations. It also is a key indicator of financial conditions as it is employed as the benchmark for borrowing rates in other lending products like mortgages.

The 2-year note rate TMUBMUSD02Y, -2.32%  slumped 6.6 basis points to 1.20%, its lowest since April 2017, while the 30-year bond yield TMUBMUSD30Y, -1.41%  slipped 3.3 basis points to 1.803%, falling further into record territory.

What’s driving Treasurys?

Worries about the coronavirus continued to dominate the attention of market participants who dived into government paper in recent sessions to take shelter from the turbulence in risk assets. The potential for the virus to freeze economic activity beyond China’s borders and upend global supply chains have kept investors across the world on edge.

Losses in U.S. equities accelerated on Tuesday, a day after the S&P 500 SPX, -3.03%   index and the Dow Jones Industrial Average DJIA, -3.15%   suffered their biggest one-day percentage declines since Feb. 8, 2018.

Investors have also attributed the decline in government bond rates to longstanding factors including moderating economic growth, weaker inflation expectations, and an insatiable demand for safe assets in global financial markets.

The slide in long-dated yields weighed on demand for a sale of 2-year Treasury notes in the afternoon, but the weak result was not enough to push yields higher, said analysts.

In economic data, the U.S. Case-Shiller home price index for December rose 2.9%. Meanwhile, the February consumer confidence index rose to a five month high at 131.6 in January, up from 128.2 the previous month.

Federal Reserve Vice Chairman Richard Clarida said the coronavirus hit on the Chinese economy could spill over to the rest of the globe, but it was too early to determine the magnitude of the impact.

Opinion: If the coronavirus isn’t contained, a severe global recession is almost certain

What did market participants’ say?

“You’re going to see a reduction in first-quarter GDP [for the U.S.], there’s no way that can’t be the case,” said Michael DePalma, head of quantitative fixed income at MacKay Shields, in an interview.

“There’s obviously a big safe-haven bid, but we’ve also seen the Fed gradually mention the coronavirus more. As a result, we’ve seen expectations of cuts move forward. The Fed has cut interest rates whenever the market has demanded it, whether they like to admit it or not,” Max Gokhman, head of asset allocation at Pacific Life Fund Advisors, told MarketWatch.