U.S. Treasury yields inched up Friday, as investors monitored the latest developments around the Russian invasion of Ukraine.
The yield on the benchmark 10-year Treasury note rose by 2.5 basis points to 1.995% by around 7:20 a.m. ET. The yield on the 30-year Treasury bond moved 1.9 basis points lower to 2.314%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The 2-year note yield, meanwhile, ticked 5.8 basis points higher to about 1.604%.
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 assaulting Ukraine by air, land and sea. U.S. and Western allies have condemned the attack, with President Joe Biden vowing to introduce a new wave of sanctions on Russia that would “exceed anything that’s ever been done.”
Ukrainian President Volodymyr Zelenskyy said Friday that the military had stopped Russian invasion troops “in most directions” despite renewed missile attacks. The situation on the ground in Ukraine is extremely fluid, and accounts of the military situation are difficult or impossible to confirm. (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 15-16 meeting.
On the data front, January’s personal consumption expenditures index, which is one measure of inflation, is due out at 8:30 a.m. ET on Friday.
Personal income and spending data for January is also set to be released at 8:30 a.m. ET.
January’s pending home sales data is then slated for release at 10 a.m. ET.
— CNBC’s Ted Kemp contributed to this market report.
