(Bloomberg). — Treasuries underwent a swift u-turn on Friday, as investors became more concerned about Russia’s geopolitical situation. The move was in response to rising inflation expectations and speculations regarding Federal Reserve’s policy hawkishness.

Treasuries quickly shot to record highs while volume spiked in the 10-year note futures. Jake Sullivan, U.S. national security adviser said the United States continues to witness signs of Russian escalation including the arrival of new forces at the Ukrainian border. Russia denied plans to invade Ukraine. The U.S. stated that Russia does not believe Vladimir Putin made any final decisions.

The gain in Treasuries pulled the 10-year rate down as much as 10 basis points to 1.93%, temporarily erasing the prior day’s advance. All curves saw a plunge in yields.

“After being buffeted all week by fears of inflation and a hawkish Fed, it looks like USTs are now rallying on some safe-haven demand due to Russia tensions,” said Brown Brother Harriman & Co.’s Win Thin. “This sort of haven bid is rarely sustained, and so I think we eventually go back to selling USTs next week.”

While the yen is seen as a safe haven during times of high risk aversion, it rose, and the dollar grew against all other currencies, while the ruble fell.

With asset prices being pulled to-and-fro by inflation and geopolitical concerns “tensions in financial markets are running high,” wrote BMO’s Ian Lyngen.

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