As the political tension in Ukraine intensifies and U.S. stocks decline, investors are jumping back to Treasury bonds and related exchange traded funds, pushing down 30-year Treasury yields to a 9-month low in the search for safety.
The iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) rose 0.8% Tuesday as Treasury 30-year bond yields dipped a little over 0.04 percentage points to 3.44% in midday trading, the least since July 3.
Meanwhile, the benchmark 10-year Treasury yield dipped almost 0.04 percentage points to 2.60%. The iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) was up 0.3% Tuesday.
U.S. Treasuries gained on safe-haven demand as Ukrainian forces moved toward Slovyansk, reports Susanne Walker for Bloomberg. [Russian Resistance: Russia ETFs Face Technical Issues]
“The Ukraine story leans on the fact that there’s some risk out there,” Thomas Tucci, managing director and head of Treasury trading at CIBC World Markets Corp, said in the Bloomberg article. “There are casualties, aggression and no certainty about the outcome. It’s just an unstable situation.”
The Ukrainian government says there is an “anti-terrorist operation” underway in eastern Donetsk region, CNN reports.
“The aim of these actions is to protect the citizens of Ukraine, to stop terror, to stop criminality, to stop attempts to tear Ukraine to pieces,” President Oleksandr Turchynov told Parliament, according to CNN.
Treasury bonds have been strengthening this year as a series of problems in the emerging markets and now geopolitical risk in Ukraine pushed down yields. TLT has gained 9.2% year-to-date while IEF rose 3.7%.
iShares 20+ Year Treasury Bond ETF
For more information on Treasuries, visit our Treasury bonds category.
Max Chen contributed to this article.