Traders work on the floor of the New York Stock Exchange (NYSE) on October 22, 2024 in New York City.
U.S. Treasury yields slid on Tuesday as tensions between Ukraine and Russia increased.
The yield on the 10-year Treasury was lower by 5 basis points at 4.367%. The 2-year Treasury was down by 3 basis points at 4.251%.
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The rise in yields came as investors flooded into the asset as a safe haven amid rising geopolitical tensions. One basis point is equal to 0.01% and yields and prices move in opposite directions.
Russian President Vladimir Putin warned the U.S. on Tuesday that the threshold for the use of nuclear weapons had lowered. Under the new doctrine, Russia would consider using such weaponry if it — or allies — were met with "with the use of conventional weapons that created a critical threat to their sovereignty and (or) their territorial integrity."
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The new stance comes after President Joe Biden allowed Ukraine to use U.S. weapons to strike inside Russia. It also follows news that Ukraine hit a Russian border city with U.S.-made missiles. The Russian military said in a statement that a "facility in Bryansk region at 03:25 tonight using six ballistic missiles."
On the data front, new housing figures for October fell short of expectations in October as mortgage rates rose. Privately owned new construction fell 3.1% from September and came in below a Dow Jones estimate for 1.34 million. Building permits also slipped 0.6% month over month and 7.7% from a year ago.
On building permits, the total of 1.42 million represented a 0.6% monthly decline and missed the forecast for 1.43 million. Permits declined 7.7% from a year ago.
Money Report
This data, along with November's flash S&P Global Composite PMIs tracking trends across the manufacturing and services sectors, should give clues into the strength of the U.S. economy ahead of Trump's second term. Yields have soared following the election with traders betting that Trump's pro-business policies and tax cuts will boost economic growth.
Traders also kept an eye on Washington as Wall Street assessed Trump's potential picks for Treasury Secretary.
"The relevance of the pick for financial markets will probably be how the US Treasury market reacts. A candidate with proven reliability will be well-received by the bond markets, while those with less experience – or perhaps a candidate that will offer less of a counterweight to some of President-elect Trump's plans – could see the long end of the US Treasury market sell-off and perhaps even soften the dollar too," ING economists wrote in a note Tuesday.
Those reported to be in the running include Scott Bessent, founder of Key Square Group, and billionaire businessman Howard Lutnick, the Trump transition chair who has received the blessing of Trump confidante Elon Musk.
— CNBC's Jeff Cox contributed to this report.
