US Treasury futures drifted slightly lower during the US trading session after Iran stated it had "no choice" but to exercise sovereignty over the Strait of Hormuz in order to safeguard its security, pushing oil prices to a five-month high.
European bonds also drew attention, as French government debt continued to underperform following violent protests over the weekend, widening the spread between French and German bonds.
Same-day corporate bond issuance exceeding $10 billion also applied some supply-side pressure on US Treasuries.
Shortly after 3pm New York time, the Treasury yield curve rose by 5 basis points to 7 basis points across the board, with intermediate maturities leading the decline, steepening the 2s5s and 2s10s spreads by 1.2 basis points and 1.5 basis points respectively.
The 10-year Treasury yield closed near its intraday high at approximately 5.14%, while the French benchmark 10-year government bond yield rose 13 basis points to 4.94%, the largest increase since September.
In late trading, WTI crude oil futures gained about 2.2%, while a rebound in chip stocks drove the Nasdaq index up 1.2%.
Active corporate issuance further added upward pressure on Treasury yields.
Consumer goods companies Kimberly-Clark and Walmart led four issuers that day, with a combined planned issuance of $10.4 billion in bonds.
Futures trading was generally light overall, with Treasury futures volume by 3pm New York time amounting to only 65% of the 20-day average.
As of 3:54pm Eastern Time, the 2-year Treasury yield stood at 4.7634%; the 5-year Treasury yield at 4.9381%; the 10-year Treasury yield at 5.1439%; the 30-year Treasury yield at 5.4818%; the spread between 2-year and 10-year Treasury yields at 37.84 basis points; and the spread between 5-year and 30-year Treasury yields at 54.19 basis points.
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