10-year Treasury yield cuts losses but still below 2% as investors monitor Russian invasion
U.S. Treasury yields staged a major reversal on Thursday, cutting losses from morning trading that were sparked by the Russian invasion of Ukraine.
The yield on the benchmark 10-year Treasury note was down 1 basis point to 1.965% in afternoon trading. Shorter-term yields show held on to larger declines, but the yield on the 30-year Treasury bond ticked up by less than a basis point to 2.279%.
Yields move inversely to prices and 1 basis point is equal to 0.01%.
Treasurys
| TICKER | COMPANY | YIELD | CHANGE |
|---|---|---|---|
| US1M | U.S. 1 Month Treasury | 5.367% | +0.002 |
| US3M | U.S. 3 Month Treasury | 5.389% | +0.002 |
| US6M | U.S. 6 Month Treasury | 5.38% | -0.002 |
| US1Y | U.S. 1 Year Treasury | 5.179% | -0.003 |
| US2Y | U.S. 2 Year Treasury | 4.823% | -0.034 |
| US10Y | U.S. 10 Year Treasury | 4.451% | -0.03 |
| US30Y | U.S. 30 Year Treasury | 4.598% | -0.024 |
Treasury yields dropped sharply in early trading as investors flocked to the safe haven asset of government bonds, with gold and oil prices spiking. The 10-year and 30-year yields were down more than 10% in morning trading.
However, those moves reversed course later in the day, mirroring dramatic turnarounds in other markets like U.S. equities.
"The immediate reaction was extreme, especially to me consider that the odds were this was going to happen at some point," said Mark Heppenstall, president and chief investment officer at Penn Mutual Asset Management.
The dramatic morning moves came after Russian forces pushed into Ukraine. 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.
"We do believe that higher energy prices are likely to lead to rising inflationary pressure, which should increase pressure on the Fed to hike rates. But the Fed will also be reluctant to raise rates during periods of high market volatility," investment firm Nuveen said in a note to clients.
"We continue to expect a 25 bps rate hike in March, as the Fed has to be seen doing something and remain consistent in its messaging. The bottom line, though, is that any Fed action (or inaction) could lead to even more volatility," the note said.
President Joe Biden condemned the attack, saying in a statement that "the world will hold Russia accountable." Biden announced expanded sanctions for Russian banks and financial elites on Thursday afternoon.
The 10-year yield for Russian government Treasurys jumped above 12%.
On the U.S. economic front, the number of initial jobless claims filed last week dipped to 232,000, slightly better than expected.
— CNBC's Tanaya Macheel contributed to this market report.