Ukraine Tensions Trigger Sovereign Bond Trading As Investors Seek Safe Havens
Yields on the benchmark 10-year Treasury note rose and declined last week in concert with the news reports about Putin’s intentions with regard to invading Ukraine, falling to well below the 2% level on Friday—to 1.927%—ahead of the long holiday weekend in the US. This morning, yields have slumped even further—down at the time of writing to 1.872% as Treasury buying escalates.
Given this latest state of affairs, a torrid day for global markets, including sovereign bonds, would appear to be expected. Germany’s 10-year bond yield fell closer to 0.2% on Monday, down from above 0.3% last week, and has slipped further, to 0.185% currently. Still, the German benchmark may not be a fair proxy for Treasuries, given Germany’s vulnerability to energy blackmail from Russia.