Bonds

Treasury yields slide as fresh sanctions are imposed on Russia

Key Points
  • Investors have been piling into safe haven investments like U.S. government bonds since Russia invaded Ukraine on Thursday morning.
  • Federal Reserve Chairman Jerome Powell is due to testify before Congress this week.

U.S. Treasury yields slid on Monday morning, as investors monitored developments in the Russia-Ukraine conflict.

The yield on the benchmark 10-year Treasury note slid nearly 12 basis points to 1.868% in afternoon trading. The 30-year Treasury slid nearly 10 basis points to 2.199%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasurys


Investors have been piling into safe haven investments like U.S. government bonds since Russia launched an invasion on Ukraine on Thursday morning, which has pushed yields lower.

Russia continued to advance into Ukraine over the weekend. Russian military vehicles entered Ukraine's second-largest city Kharkiv, with reports of fighting taking place and residents being warned to stay in shelters.

Russian President Vladimir Putin put his country's nuclear deterrence forces on high alert on Sunday amid a growing global backlash against Russia's invasion of Ukraine. Despite the escalation, Ukraine's Defense Ministry said representatives for Ukraine and Russia have agreed to meet on the Ukraine-Belarus border "with no preconditions."

Western allies have announced more sanctions against Russia. The U.S., European allies and Canada agreed Saturday to remove key Russian banks from the interbank messaging system, SWIFT.

Russia's central bank on Monday more than doubled the country's key interest rate to 20% as its currency, the ruble, hit a record low against the dollar on the back of new sanctions.

Federal Reserve Chairman Jerome Powell is due to testify before Congress on Wednesday and Thursday for the central bank's semiannual monetary policy report to lawmakers. Investors will be watching the testimonies closely for any indication on how the Russia-Ukraine crisis may affect the Fed's plans for raising interest rates and tightening monetary policy more broadly.

"We believe that the outlook for Fed policy is far less certain now than prior to the outbreak of the conflict in Ukraine. On the one hand, inflation is likely to remain high or move higher due to the shock from the reduced supply of commodities to the global market. ... However, commodity price shocks often reduce demand and slow growth longer term," strategists from Charles Schwab said in note.

On the U.S. economic front, the Chicago Business Barometer from the Institute for Supply Management fell more than expected in February, though it did show a slight decline in prices paid for producers.

CNBC.com staff contributed to this market report.