U.S. Treasury yields rose slightly on Monday as Wall Street closely monitored escalating tensions in the Middle East, particularly the ongoing conflict between the United States and Iran. The yield on the 10-year U.S. Treasury note, a key benchmark for government borrowing, increased by over 1 basis point to 4.558%, while the 30-year Treasury bond yield also climbed more than 1 basis point to 5.078%. In contrast, the 2-year Treasury note yield, which is more sensitive to Federal Reserve interest rate policy, remained broadly flat at 4.181% [1].
The rise in yields coincided with the U.S. Central Command's completion of its ninth consecutive evening of strikes against Iran, targeting military command centers, air defense and coastal surveillance sites, maritime capabilities, and missile and drone launch sites. These operations, conducted at 10 p.m. ET on Sunday, were intended to further diminish Tehran's ability to attack commercial vessels and civilian mariners in the Strait of Hormuz [1].
The conflict has intensified, with Tehran reporting U.S. strikes on civilian infrastructure, including the Bonji desalination plant, which cut off water supplies to approximately 10,000 people. In retaliation, Iran has launched attacks on targets in neighboring countries such as Bahrain, Saudi Arabia, and Jordan. Additionally, the Kuwaiti army reported intercepting 'hostile' drone attacks from Iran on Monday [1].
Last week, Treasury yields had eased as investors digested economic data indicating the U.S. economy's resilience to inflationary pressures stemming from the Iran war. Notably, borrowing costs declined following cooler-than-expected producer and consumer price data, and U.S. jobless claims for the week ending July 11 came in lower than forecasted at a seasonally-adjusted 208,000 [1]. Looking ahead, investors are expected to focus on the upcoming S&P Global Flash U.S. PMI report on Friday, which will provide further insight into the health of the American manufacturing and services sectors [1].
CONCLUSION
U.S. Treasury yields have edged higher as geopolitical risks in the Middle East escalate, reflecting investor caution. While recent economic data has shown resilience, market participants remain attentive to both the ongoing conflict and upcoming economic indicators for further direction.