The 10-year Treasury yield touched its highest level since January 2025 on Tuesday after fresh U.S. strikes on Iran and an attack on a tanker in the Strait of Hormuz pushed oil prices sharply higher. Longer-term borrowing costs stayed elevated as traders weighed the geopolitical escalation against a mixed batch of U.S. economic data.
U.S. Treasury yields were little changed on Tuesday after renewed tensions in the Middle East drove global government borrowing costs to their highest point going back to early last year. The 10-year Treasury note yield rose less than 1 basis point to 4.766%, after touching its highest level since Jan. 14, 2025 earlier in the day.
The 30-year Treasury bond yield slipped less than 1 basis point to 5.241%. The 2-year Treasury note yield climbed more than 1 basis point to 4.369%. Yields and prices move inversely to one another.
Strikes on Iran push oil, and yields, higher
Borrowing costs reached their highs of the day as traders continued to weigh developments in the Middle East, after U.S. forces launched fresh strikes against Iran and a tanker was struck by unknown projectiles off the coast of Oman in the Strait of Hormuz. The escalation pushed oil prices higher. West Texas Intermediate futures were last seen 3% higher at above $88 a barrel. Brent crude advanced more than 2% to above $92.
According to CNBC: "Yield volatility is likely to persist in the near term." UBS chief investment officer of the Americas Ulrike Hoffmann-Burchardi said inflation worries remain elevated with no clear path to reopening the Strait after six months of war, and that uncertainty over the Federal Reserve's policy outlook, fiscal concerns and rising AI-related debt issuance have kept bonds under pressure.
Payrolls data looms after mixed August readings
Investors are also monitoring the G20 finance ministers' meeting in Asheville, North Carolina, which is set to conclude later Tuesday. A raft of domestic economic data is also due, with nonfarm payrolls figures expected Friday. The August ISM Manufacturing Index fell 1 point from July to 54.6, slightly below the 55.3 economists polled by Dow Jones had expected. Job openings in July came in roughly as expected.
Source: CNBC
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