U.S. Treasury yields climbed on Tuesday following President Donald Trump's renewed warning that the United States would target Iran's civilian and energy infrastructure if Tehran failed to meet an impending deadline to agree to reopen the Strait of Hormuz.
The yield on the benchmark 10-year U.S. Treasury note, a key gauge of government borrowing costs, rose more than 1 basis point during early trading, reaching 4.3466% as of 3:40 AM Eastern Time.
The more policy-sensitive 2-year Treasury yield also increased by 1 basis point to 3.8622%. Concurrently, the 30-year bond yield advanced by 1 basis point to 4.9060%. A single basis point equals 0.01%, or one-hundredth of a percentage point. Yields move inversely to bond prices.
This rise in borrowing costs came after President Trump reiterated his threat to bomb Iranian infrastructure such as power plants and bridges if an agreement to reopen the vital Strait of Hormuz was not reached by 8:00 PM Eastern Time on Tuesday. The President stated he would not further extend the deadline and warned that failure to secure a deal would result in the complete destruction of Iran's critical infrastructure.
Iranian officials have rejected proposals for a temporary truce, instead demanding a permanent end to the conflict.
As the Tuesday deadline approached, energy prices continued their upward trajectory. The global benchmark Brent crude rose 1.4% in early trading to $111.27 per barrel, while U.S. West Texas Intermediate (WTI) crude was last up 2.1% at $114.81 per barrel.
U.S. Treasury prices had previously gained ground, which helped stabilize yields, following the release of better-than-expected non-farm payroll data on Friday.
Several U.S. Treasury officials are scheduled to deliver remarks on Tuesday. Chicago Federal Reserve Bank President and CEO Austan Goolsbee is set to speak at the Detroit Economic Club. On Monday, Goolsbee indicated that inflation remains a greater challenge for the U.S. economy than employment. Federal Reserve Vice Chair Philip Jefferson is also expected to speak later on the economic and labor market outlook.
Investors will be closely monitoring the release of U.S. durable goods orders data for February, which is forecast to show a decline compared to the flat reading recorded in January.
Comments