Treasury yields decline as investors seek safe havens amid Israel-Hamas conflict

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U.S. Treasury yields fell on Tuesday as trading resumed after Columbus Day, with investors pouring into government bonds as they weighed the potential geopolitical and economic impact of the Israel-Hamas war.

The 2-year Treasury yield was down by about 12 basis points to 4.957%. The 10-year Treasury yield was last down more than 13 basis points at 4.653%. Yields and prices move in opposite directions. One basis point equals 0.01%.


Concerns about the implications of the Israel-Hamas conflict continued on Tuesday, leading investors towards Treasury yields, which are traditionally seen as safer investments. Yield prices have declined as a result.

Palestinian militant group Hamas launched a deadly surprise attack against Israel on Saturday. On Tuesday, Israel's military said it had secured the Israel-Gaza border as it continued airstrikes on the Hamas-governed Gaza Strip.

Elsewhere, Federal Reserve officials on Monday gave hints about the outlook for interest rates.

The odds of another rate hike from the Federal Reserve in November is falling, according to the CME FedWatch Tool.

Fed Vice Chair Philip Jefferson said the central bank needs to be careful with how it proceeds following the recent climbs of Treasury yields, while Dallas Fed President Lorie Logan suggested surging yields may mean there is less of a need for further rate hikes. Further comments from Fed officials are expected on Tuesday.

The Fed began hiking interest rates in March 2022, with the goal of easing inflation and cooling the economy, often prompting concerns that the speed of rate hikes and level of rates would lead to a recession.

Early on Tuesday, the International Monetary Fund raised its U.S. growth forecast for 2023 by 0.3 percentage points to 2.1%, citing resilience from consumers and stronger business investment.