U.S. Treasury yields rose on Wednesday morning, with investors focused on the Russia-Ukraine conflict and Federal Reserve Chairman Jerome Powell’s congressional testimony.
The yield on the benchmark 10-year Treasury note moved 1 basis point higher to 1.7292% at 4:10 a.m. ET. The yield on the 30-year Treasury bond advanced less than a basis point to 2.115%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
Treasurys
The 10-year Treasury yield fell as low as 1.68% on Tuesday, with investors rushing into safe-haven investments, as Russia continued its invasion of Ukraine.
The conflict has continued to drive oil prices higher, with Brent crude futures climbing 6% to $111.59 a barrel on Wednesday. West Texas Intermediate crude futures, the U.S. oil benchmark, were also up more than 6% at $110.18 a barrel.
Military experts say they expect the war in Ukraine to become more destructive and deadly as Russia turns to heavy artillery.
In his State of the Union address, U.S. President Joe Biden promised to “inflict pain” on Russian President Vladimir Putin.
The jump in oil prices because of the conflict has led to concerns that this could push up headline inflation, slow the economy, thereby complicating the Fed’s plans for normalizing monetary policy.
Powell is due to deliver his semiannual monetary policy testimony to the House at 10 a.m. ET on Wednesday, and then to Senate at the same time on Thursday. The Russia-Ukraine crisis has prompted Wall Street to dial down its expectations for Fed action.
Powell is now tasked with telling Congress that the central bank will be doing more to control inflation at a time when markets expect it will be doing less.
Susannah Streeter, senior investment and markets analyst at U.K. investment platform Hargreaves Lansdown, said on Wednesday that it is now expected that the Fed might not be as aggressive in hiking interest rates this year “with the spectre of stagflation looming, and expectations of a bigger hike at the next meeting are fading away.”
Meanwhile, ADP’s February employment change report is slated for release at 8:15 a.m. ET. Mortgage application numbers are due out at 7 a.m. ET.
An auction is scheduled to be held on Wednesday for $35 billion of 119-day bills.
— CNBC.com staff contributed to this market report.