Key Highlights

  • The 30-year Treasury Yield rose more than 1 basis point to around 5.322%, approaching its highest level since 2002.
  • The 10-year Treasury yield climbed more than 1 basis point to 4.736%, while the 2-year yield held flat at 4.186%.
  • Oil prices rose after a 60-day deadline for a US-Iran peace deal expired without an extension, with Iran signaling it could take a more offensive posture.
  • Long-dated government bond yields in Japan, Germany, the UK, and France all traded near or at multi-decade highs.

Long-Dated Yields Push Toward Two-Decade Highs

Treasury yields climbed further Tuesday, with long-dated maturities extending their advance to levels not seen in more than two decades as tensions between the US and Iran showed no sign of easing. The 30-year Treasury yield added more than 1 basis point to trade around 5.322% in early trading, hovering just below its highest level since 2002. The 10-year Treasury note yield, a key benchmark for mortgages, auto loans, and consumer credit, rose more than 1 basis point to 4.736%, while the 2-year yield, which tends to track near-term Federal Reserve policy expectations, held roughly flat at 4.186%.

Oil Prices Rise as Ceasefire Window Closes

Oil prices rose after a 60-day deadline for the US and Iran to reach a peace agreement expired Monday without an extension, according to state media reports out of Iran. A senior Iranian official said separately that Tehran would move toward a more offensive posture should diplomatic efforts with Washington ultimately fail. Market strategists said the past day's trading reflected broad-based weakness across both bonds and equities driven by negative headlines from the Middle East, noting that while no single catalyst drove the move, the lack of progress toward a resolution led investors to price in a longer closure of the Strait of Hormuz.

Inflation Concerns Push Global Yields Higher

Renewed Inflation concerns tied to the standoff are pushing government borrowing costs higher well beyond the US, with several major economies seeing long-dated bond yields trade near multi-decade highs. Japan's long-dated government bond yields hovered close to levels reached in the spring, when they touched a 40-year high. Germany's 30-year Bond Yield stood at its highest level since 2011, while UK long-dated yields approached a multi-decade peak of their own. French 30-year government bond yields also climbed to their highest level since before the 2008 financial crisis.

Investors Turn to Fresh Economic Data

With bond markets already on edge, investors were also looking ahead to a fresh batch of US economic data due Tuesday, including July Import and export price figures alongside housing starts and pending home sales, for further signals on the economy's underlying momentum as the Federal Reserve weighs its next policy steps.