Treasury prices surge, yields fall as investors run for safety during Russia-Ukraine invasion
U.S. Treasury yields saw steeper falls on Thursday morning, after Russia invaded Ukraine.
The yield on the benchmark 10-year Treasury note dropped more than 10 basis points to 1.863% at around 8:20 a.m. ET. The yield on the 30-year Treasury bond fell 10 basis points to 2.173%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
Treasury yields dropped as investors flocked to the safe haven asset of government bonds, while gold jumped to its highest level in more than a year. Global markets fell sharply following the news of Russia’s attack on Ukraine.
Russian President Vladimir Putin said in an address early on Thursday that Russia would launch military action in Ukraine. There were then reports of multiple explosions in at least four Ukrainian cities.
This comes just days after Putin ordered troops into two breakaway eastern regions of Ukraine.
President Joe Biden condemned the attack, saying in a statement that “the world will hold Russia accountable.”
The 10-year yield for Russian government Treasurys jumped above 12%.
The escalating conflict has also been pushing up the price of oil, leading to concerns that this could drive overall inflation higher, complicating the Federal Reserve’s strategy of hiking interest rates to rein in rising prices.
Patrick Armstrong, chief investment officer at Plurimi Wealth, told CNBC’s “Squawk Box Europe” on Thursday that “we may have a Fed who won’t hike as a aggressively as they otherwise would have, but war and sanctions are stagflationary — they don’t create growth, they create inflation but not the right kind of inflation and that should lead to a steepening of the yield curve.
“You can’t own a 10-year Treasury yielding 1.7% with a backdrop of stagflation,” Armstrong added, explaining that the inflation part of that scenario will eventually lead to higher Treasury yields.
The number of initial jobless claims filed last week is also due to be released at 8:30 a.m. ET.
Meanwhile, Fed governor Christopher Waller is due to speak at the University of California, Santa Barbara, at 8:25 p.m. ET.
Auctions are scheduled to be held on Thursday for $45 billion of 4-week bills, $35 billion of 8-week bills and $50 billion of 7-year notes.
— CNBC’s Tanaya Macheel contributed to this market report.
