Treasury yields dip as economic slowdown fears mount

U.S. Treasury yields dipped on Tuesday morning, with investor focus remaining on the Covid-19 outbreak in China and concerns over a global economic slowdown.

The yield on the benchmark 10-year Treasury note fell under a basis point to 2.8335% at 3:45 a.m. ET. The yield on the 30-year Treasury bond moved less than basis point lower to 2.9048%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasury yields slumped on Monday, along with a sell-off in stock markets. This came on the back of concerns that a Covid-19 breakout in Beijing, China, could see a lockdown and slow economic growth in the region.

Beijing announced late Monday that it would be expanding mass testing for the virus.

The potential drag on economic growth from higher inflation and rising interest rates also remains a concern for investors.

David Pierce, managing director at GPS Capital Markets, told CNBC’s “Squawk Box Europe” on Tuesday that he believed the Federal Reserve would hike interest rates by 50 basis points at both of the next two policy meetings.

However, Pierce said these hikes could “really precipitate a turnaround in the economy and slow things down so much so that they might have to back those off very quickly — it is a really volatile situation right now.”

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In terms of economic data releases due out on Tuesday, March’s durable goods order numbers are set to come out at 8:30 a.m. ET.

The S&P/Case-Shiller February home price index is expected to be out at 9 a.m. ET.

March’s new home sales data and the CB April consumer confidence index are slated for release at 10 a.m. ET.

Developments in the Russia-Ukraine war also continue to be a focus for investors. At a high-level meeting in Kyiv on Sunday, the U.S. pledged just over $700 million in military financing to help Ukraine and other allied countries in central and eastern Europe involved in the war effort.

The U.S. State Department approved a potential sale of $165 million in ammunition to Ukraine.

Meanwhile, an auction is scheduled to be held on Tuesday for $48 billion of 2-year notes.

CNBC.com staff contributed to this market report.

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