Investors’ attention remained focused on the Covid-19 outbreak in China and concerns about a global economic slowdown as Treasury yields fell Tuesday morning.
At 4:10 p.m. ET, the yield on the benchmark 10-year Treasury note decreased 8.9 basis points to 2.74 percent. The 30-year Treasury bond yield dropped 5.12 basis points to 2.842 percent. Yields move in the opposite direction of prices, with 1 basis point equaling 0.01 percent.
Investors were concerned about a lockdown and slow economic growth in the region because to a Covid-19 outbreak in Beijing, China. Late Monday, Beijing stated that it would expand mass testing for the virus.
“Growth scares will cause a temporary drop in yields, but unless there’s a real threat of a global slowdown (which there isn’t yet), the direction of global yields remains higher, and we believe it’s only a matter of time before the 10-year yield hits 3%,” Tom Essaye, founder of Sevens Report, said in a research note.
Investors are also concerned about the impact of greater inflation and rising interest rates on economic growth.
On Tuesday, David Pierce, managing director at GPS Capital Markets, told CNBC’s “Squawk Box Europe” that he expects the Federal Reserve to raise interest rates by 50 basis points at both of its upcoming policy meetings.
These hikes, however, might “actually create a turnaround in the economy and slow things down to the point where they might have to back them off very soon — it is a really dangerous situation right now,” according to Pierce.
Investors are still paying attention to developments in the Russia-Ukraine conflict. The US promised slightly over $700 million in military aid to Ukraine and other partner countries in Central and Eastern Europe engaging in the war effort at a high-level meeting in Kyiv on Sunday.
The State Department of the United States has approved a $165 million ammunition sale to Ukraine.
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