U.S. Treasury yields moved higher on Tuesday as renewed uncertainty over the Middle East pushed oil prices higher and investors awaited key inflation data due later in the week.
U.S. Treasury yields moved higher on Tuesday as renewed uncertainty over the Middle East pushed oil prices higher and investors turned their attention to inflation data due later in the week.
The yield on the 10-year Treasury note, a key benchmark for borrowing costs including mortgages, auto loans and credit cards, rose 3 basis points to 4.7334% in early trading.
Other maturities also advanced. The 2-year Treasury yield, which is closely influenced by expectations for Federal Reserve interest-rate policy, increased by more than 2 basis points to 4.2597%.
The 30-year Treasury yield rose more than 3 basis points to 5.2790%. Longer-term government bond yields can be particularly sensitive to changes in inflation expectations and broader economic uncertainty.
A basis point is equal to 0.01 percentage point. Bond prices and yields move in opposite directions, meaning rising yields generally correspond with falling bond prices.
The increase in Treasury yields came as prospects for an agreement to end the Middle East conflict appeared to weaken. President Donald Trump responded to Iranian demands for reparations by suggesting that Iran should instead compensate the United States for the war.
Oil prices also moved higher following Trump's comments that the United States now controls the Strait of Hormuz. West Texas Intermediate futures rose 1.78% to $83.58 a barrel, while Brent crude, the international benchmark, gained 1.81% to $89.25.
Higher energy prices can influence the inflation outlook, making oil markets an important focus for investors assessing the future path of interest rates. Treasury yields had already ended Monday's session higher, with both the 10-year and 30-year yields gaining 4 basis points.
Investors are now awaiting additional U.S. economic data for indications of how inflation and the latest developments in the Middle East could affect the Federal Reserve's interest-rate outlook.
Existing home sales data is due Tuesday, with July sales expected to reach 4.04 million, slightly below 4.09 million in the previous month. The July core inflation reading on a monthly and annual basis is scheduled for Wednesday.
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