Treasury markets continued to climb further on Tuesday, building on the modest gains recorded in the previous session. Despite giving up some early gains, bond prices remained solidly positive. Consequently, the yield on the benchmark ten-year note—whose yield inversely correlates with its price—dropped by 3.5 basis points to 4.379 percent.
This decline in the ten-year yield follows its spike to a five-month intraday high last Friday. The continued attraction of treasuries is driven by their status as a safe haven amidst rising tensions between the U.S. and Russia over the ongoing conflict in Ukraine.
Recent geopolitical developments include President Joe Biden authorizing Ukraine to strike Russian territories with U.S.-supplied long-range missiles. In response, Russian President Vladimir Putin has updated the nation's nuclear policy. According to Kremlin Spokesperson Dmitry Peskov, the revised doctrine allows Russia to use nuclear weapons if conventional arms are used against Russia or Belarus, posing a critical threat to their sovereignty or territorial integrity. Furthermore, Peskov emphasized that aggression involving a non-nuclear state, supported by a nuclear state, is viewed as a coordinated attack, as reported by NBC News.
This policy shift came just before news surfaced that Ukraine utilized U.S.-manufactured long-range missiles to target a Russian military facility in the Bryansk border region.
Wednesday's trading might experience subdued activity due to the absence of significant U.S. economic data. However, developments from overseas and statements from several Federal Reserve officials could influence market movements.
