The 10-year U.S. Treasury yield eased slightly Friday, as investors monitored the latest developments around the Russian invasion of Ukraine.
The yield on the benchmark 10-year Treasury note was marginally lower at 1.967% by around 10:35 a.m. ET. The yield on the 30-year Treasury bond dipped 2 basis points to 2.273%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The 2-year note yield, meanwhile, ticked 5.4 basis points higher to about 1.598%.
Friday’s moves come after a volatile session Thursday across assets, including bonds. The 10-year traded as low as 1.85% on Thursday — pushing prices higher — as traders tried to protect their portfolios by loading up on traditional safe havens such as Treasurys.
The benchmark yield later recovered from those lows, mirroring a stunning reversal seen in the stock market. The major U.S. stock averages closed higher on Thursday, erasing sharp intraday declines.
Russia attack on Ukraine
Russia is closing in on the capital city of Kyiv, Ukrainian officials said Friday. The capital had been hit by “horrific Russian rocket strikes,” Ukrainian Foreign Minister Dmytro Kuleba said.
Later Friday, multiple reports said Russian President Vladimir Putin is ready to send a delegation to Belarusian capital Minsk for negotiations with Ukraine.
European Union leaders are discussing imposing sanctions on any European assets held by Putin and Foreign Minister Sergey Lavrov, two sources told CNBC’s Silvia Amaro. It is not clear whether Putin or Lavrov own any significant assets in the EU.
(Follow our live blog for the latest news on the Russia-Ukraine crisis.)
Elliot Hentov, head of global macro policy research at State Street Global Advisors, told CNBC’s “Squawk Box Europe” on Friday that there would be a “stagflationary impulse” from the conflict. Stagflation refers to a combination of a slowdown in economic growth and rising inflation.
He said stagflation would likely hit the neighboring countries in Europe hardest but would “fade quite a bit” by the time it hits the United States.
For this reason, Hentov said, the U.S. hiking cycle “cannot be stopped, it will be slowed down, it will be flattened, perhaps stretched out, the Fed can maybe take a little bit more time” in raising rates.
Traders are bracing for the Federal Reserve to start tightening its grip on monetary policy next month. According to the CME Group’s FedWatch tool, investors are betting the central bank will raise rates by at least a quarter-point after its March meeting.
On the data front, the core personal consumption expenditures price index, the Federal Reserve’s primary inflation gauge, rose 5.2% from a year ago, the Commerce Department reported Friday. Economists surveyed by Dow Jones expected a 5.1% print.
— CNBC’s Ted Kemp contributed to this market report.
