U.S. Treasury yields fell sharply on Tuesday morning, with the 10-year rate dropping to hover around 1.76%, as investors remained focused on Russia’s attack on Ukraine.
The yield on the benchmark 10-year Treasury note fell nearly 12 basis points 1.722% at 11:00 a.m. ET, and fell as low as 1.714% earlier in the day. The yield on the 30-year Treasury bond dropped 8 basis points to 2.103%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The Russian invasion of Ukraine has entered its sixth day. The attack has roiled global markets and seen investors look to safe haven investments like U.S. government bonds, pushing yields down.
“Until there is some sort of cease fire in Ukraine and the market no longer has to process additional sanctions and those impacts to the global economy, we will see geopolitical money flows continue to dominate the currency and bond markets, even with Fed Chair Powell’s testimony tomorrow and Thursday,” Tom Essaye of the Sevens Report said in a note to clients.
The Kremlin still wants to capture Kyiv, even as Russian forces continue running into stiff Ukrainian resistance, according to a Pentagon assessment shared with CNBC.
Satellite imagery has also emerged showing a large convoy of Russian military vehicles, some 40 miles (65km) long, advancing toward Kyiv. The satellite images were taken by Maxar Technologies on Monday and show a convoy of armored trucks traveling sometimes two or three vehicles abreast on the road. Official sources have not confirmed the convoy, however.
Investors will be watching Federal Reserve Chairman Jerome Powell’s testimonies to Congress this week, for any indication on whether the Russia-Ukraine conflict will affect the central bank’s plans for tightening monetary policy.
Geoffrey Yu, senior market strategist at BNY Mellon, told CNBC’s “Squawk Box Europe” on Tuesday that markets will likely be focused on how sanctions against Russia could cause supply chain issues and drive up prices and, in turn, how policymakers will react.
“In the U.S., for example, we don’t see this changing the Fed’s path at all,” Yu said.
In terms of data releases due out on Tuesday, Markit’s final reading for its February manufacturing purchasing managers’ index and ISM’s February manufacturing PMI both came in close to expectations. Construction spending from January came in higher than expected.
There are no auctions scheduled to be held on Tuesday.
— CNBC.com staff contributed to this market report.
