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The Yield on the 10-year Treasury Note Has Fallen as Investors Worry About a Russian Invasion of Ukraine

IMPORTANT THREADS

  • Treasury rates have continued to trend downward on Friday morning, as investors await events surrounding the Russian invasion of Ukraine.
  • 10 and 30 year yields fell by 10% in early trading on Thursday after Russia launched its attack.

U.S. Treasury rates ebbed down on Friday morning, as investors continued to follow events surrounding the Russian invasion of Ukraine.

The yield on the benchmark 10-year Treasury note declined 3 basis points to 1.9408 percent at 4:20 a.m. ET. The yield on the 30-year Treasury note fell 4 basis points down to 2.25 percent . Yields fluctuate inversely to prices and 1 basis point is equivalent to 0.01 percent
As a result of Russia’s invasion of Ukraine, Treasury rates on 10- and 30-year notes fell by more than 10% in early Thursday trade.

Later in the day, yields reduced losses marginally, matching the rebound in markets. Investors flocked to government bonds as a safe haven, bringing rates down while U.S. stock futures sank early Friday.

Russia is striking Ukraine by air, land and sea. A fresh round of sanctions on Russia would “above anything that has ever been done,” President Joe Biden has promised after the strike by the United States and its Western allies.

Ukraine’s president, Volodymyr Zelenskyy, claimed on Friday morning that despite further missile assaults, the military has halted Russian invading forces “in most directions”. Due to the fluidity of the situation on the ground in Ukraine, it is almost impossible to verify reports of the military state of affairs.

Investors will also scrutinise economic data releases, since the war has driven oil prices higher, sparking worries that this may drive up inflation more widely. This, according to some experts, might cloud the outlook for future interest rate rises by the Federal Reserve.

State Street Global Advisors’ Elliot Hentov, director of global macro policy research, said on Friday’s “Squawk Box Europe” that the war will have a “stagflationary impulse.” Inflation and a halt in economic development are referred to as “stagflation”.

While stagflation would be most severe in nearby European nations, he predicted that it would “fade quite a bit” by the time it reached the US. The U.S. rate-hiking cycle, according to Hentov, “cannot be halted, it will be slowed down, it will flatten, it may stretch out a little bit,” because of this.

January’s personal consumption expenditures index, which is one gauge of inflation, is coming out at 8:30 a.m. ET on Friday. Personal income and expenditure data for January is also slated to be revealed at 8:30 a.m. ET.

January’s pending home sales data is next set for publication at 10 a.m. ET.