Treasury yields muted despite faltering U.S.-Iran ceasefire
Treasury yields were broadly flat on Monday after the ceasefire agreement between the United States and Iran came under increasing pressure over the weekend due to mutual attacks by the two sides.
The yield on the 10-year US Treasury bond, the main indicator of US government debt, remained generally unchanged at 4.473%.
The yield on the 2-year Treasury note, which more closely tracks short-term Federal Reserve interest rate policy, rose more than 1 basis point to 4.223%. The longer-dated 30-year Treasury bond yield was flat at 5.071%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Iran’s attack on a commercial shipping ship over the weekend sparked a new wave of attacks by US forces. Iran responded by launching attacks on American military bases in several Gulf countries, deepening tensions over the strategically vital Strait of Hormuz.
The latest events cast further doubt on the future of the interim peace agreement signed last month, which aims to pave the way for the permanent reopening of the Strait of Hormuz and an end to the war after 60 days of negotiations.
Iran’s attacks targeted US bases in Kuwait, Bahrain, Jordan, Oman and Qatar, according to the country’s state media outlets, describing them as retaliatory measures against renewed US bombings.
Crude oil prices rose in early trading. Brent futures rose 2.8 percent to $78.11 a barrel, while West Texas Intermediate futures rose more than 2.5 percent to $73.25.
This week’s economic calendar is filled with a host of data that could affect the course of bond markets.
Core inflation data will be released on Tuesday, and Kevin Warsh will make his first appearance before Congress as Fed chairman this afternoon.
July consumer sentiment will be released on Friday, providing new insight into the strength of household finances.
“The question is whether these reports will confirm the strong spending narrative or whether rising geopolitical risks and higher interest rates have had a more significant impact on the consumer over the past few months,” said Alex Guiliano, chief investment officer at Resonate Wealth Partners.
— CNBC’s Sam Meredith also contributed to this report.
