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Bond Report: 2-year Treasury yield posts biggest weekly drop since November as Biden prepares to address nation on Ukraine

Treasury yields were mixed early Friday, with the 10-year note edging lower as investors monitored tensions around Ukraine while assessing the likely speed and scope of Federal Reserve interest rate hikes.

What are yields doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.971%

fell to 1.965%, down from 1.972% at 3 p.m. Eastern on Thursday.

The 2-year Treasury note yield
TMUBMUSD02Y,
1.489%

was 1.485%, compared with 1.477% on Thursday afternoon.

The yield on the 30-year Treasury bond
TMUBMUSD30Y,
2.297%

was 2.295% versus 2.312% late Thursday.

What’s driving the market?

Treasury yields fell Thursday as renewed fears of a Russian invasion of Ukraine drove demand for safe-haven assets. The move came after U.S. and NATO officials said evidence on the ground showed Russia had increased troop levels near Ukraine’s borders despite Moscow announcing earlier in the week that some units were pulling back, while President Joe Biden said the probability of an attack in coming days remained high.

Read: Here’s the technology being used to watch Russian troops as Ukraine invasion fears linger

Diplomatic efforts aimed at heading off an invasion remained in focus, with Biden expected to speak with European leaders on Friday. State Department spokesman Ned Price said late Thursday that U.S. Secretary of State, Antony Blinken, and Russian Foreign Minister Sergei Lavrov would meet late next week, “provided there is no further Russian invasion of Ukraine,” according to news reports.

Investors will hear from a handful of Fed officials on Friday. Fed Gov. Christopher Waller, New York Fed President John Williams and Gov. Lael Brainard were all set to make remarks over the course of the day.

January data on existing-home sales is due at 10 a.m. Eastern, along with January leading economic indicators.

What are analysts saying?

“Fears of an imminent military escalation in Ukraine might not have materialized so far, but the situation remains fragile and still has the potential to trigger major market moves at any time,” wrote analysts at Commerzbank, in a Friday note. “Moving towards the weekend, we suggest to remain cautious whatever headlines today might bring.”

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