U.S. Treasury yields dropped on Tuesday, as concerns over the omicron Covid variant continued to weigh on stock markets, with investors seeking out safe haven assets.
The yield on the benchmark 10-year Treasury note dropped by 5.6 basis points to 1.473% at around 11:05 a.m. ET. The yield on the 30-year Treasury bonds fell 6.3 basis points to 1.817%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
Yields came off their lows of the day after Fed Chair Jerome Powell indicated in a Congressional hearing that the central bank may accelerate its tapering of asset purchases. The 10-year yield was trading below 1.45% earlier in the session.
The yield on the 10-year Treasury was as high as 1.69% last week before Friday’s drop below 1.5%. After a slight respite Monday, yields were falling again.
Stock markets fell on Tuesday, after Moderna CEO Stephane Bancel told the Financial Times that he expects existing vaccines to be less effective against the new variant. Bancel told CNBC on Monday that it could take months to develop and ship an omicron specific vaccine.
The new Covid variant, first detected in South Africa, has now been identified in more than a dozen countries, causing many to restrict travel.
Covid symptoms linked to the omicron variant have been described as “extremely mild” by the South African doctor who first raised the alarm over the new strain. Still, the WHO said it will take weeks to understand how the variant may affect diagnostics, therapeutics and vaccines.
Fed Vice Chair Richard Clarida is due to speak at the Federal Bank of Cleveland at 1 p.m. ET on Tuesday.
On the data front, the September S&P/Case-Shiller Home Price index is expected to be released at 9 a.m. ET. The November CB Consumer Confidence index is then due out at 10 a.m. ET.
Auctions are scheduled to be held for $34 billion of 52-week bills and $30 billion of 21-day bills.
— CNBC’s Yun Li contributed to this market report.
