U.S. Treasury yields edge higher as Middle East tensions rise
The 10-year Treasury yield rose to its highest level since January 2025 amid renewed Middle East conflict, while investors watched oil prices and upcoming economic data.
U.S. Treasury yields inched up on Tuesday as renewed tensions in the Middle East lifted global borrowing costs to their highest levels since early 2025. The benchmark 10-year note yield increased by less than one basis point to 4.766%, matching its peak on Jan. 14, 2025. The 30-year bond yield slipped slightly to 5.241%, and the two-year note rose to 4.369%.
The market movement followed fresh U.S. strikes against Iran and an incident in which a tanker was hit by unknown projectiles near the Strait of Hormuz, prompting a rise in oil prices. West Texas Intermediate futures were up about 3% above $88 a barrel, while Brent crude traded above $92.
"With no clear path to reopening the Strait after six months of war, inflation worries remain elevated. Uncertainty over the Federal Reserve's policy outlook, fiscal concerns, and rising AI-related debt issuance have all kept bonds under pressure," said Ulrike Hoffmann-Burchardi, chief investment officer for the Americas at UBS.
Investors also kept an eye on the G20 finance ministers' meeting in Asheville, North Carolina, and awaited key U.S. data, including nonfarm payrolls and the ISM Manufacturing Index, which slipped to 54.6 in August.