Central banks should focus on liquidity distress in markets: Allianz chief economic advisor

Mohamed El-Erian, chief economic advisor at Allianz, joins "Squawk Box" to discuss how the coronavirus outbreak is impacting markets around the world.

The benchmark 10-year Treasury yield resumed its historic slide on Monday as investors continued to punish risk assets like stocks in favor of the safety of bonds between an all-out oil price war and contagion fears surrounding the coronavirus.

The yield on the benchmark U.S. 10-year Treasury briefly touched an all-time low of 0.318% in overnight trading, adding another 30 basis points to an unprecedented fall in the key interest rate. That rate was above 1.5% as recently as mid-February.

The 10-year yield, in particular, holds outsized importance in the U.S. economy for its use as a benchmark for mortgage rates and auto loans. The 30-year Treasury yield also hit a record low of 0.702%, breaching the 1% threshold for the first time in history. Bond yields fall as their prices rise.

The yield on the benchmark 10-year Treasury note was last seen at 0.52%. The yield on the 30-year Treasury bond was at 0.915%.

The fast-spreading coronavirus kept investors on edge for weeks as the outbreak has the potential to disrupt global supply chains and tip the economy into a recession. As of Sunday, global cases of the infection have climbed to more than 109,000 with at least 3,801 deaths around the world.

Adding to the stress is a shocking all-out oil price war after OPEC talks collapsed last week. Saudi Arabia on Saturday slashed official crude selling prices for April, in a sudden U-turn from previous attempts to support the oil market as the coronavirus hammers global demand.

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