U.S. Treasury yields slipped on Tuesday as tensions between Ukraine and Russia increased.
The yield on the 10-year Treasury was lower by more than 2 basis points at 4.392%. The 2-year Treasury was down less than a basis point to 4.282%.
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 the use of conventional weapons that created a critical threat to their sovereignty and (or) their territorial integrity."
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" was hit.
On the data front, new housing figures for October fell short of expectations 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 month over month.
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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 Donald Trump's second term. Yields have soared following the election with traders betting Trump's pro-business policies and tax cuts will boost economic growth.
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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 U.S. 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.
— CNBC's Jeff Cox contributed to this report.