Treasury Yields Edge Higher on Monday

The yield on the US 10-year Treasury note hovered around 4.33% on Monday, the highest level in about a week, as traders returned from an extended holiday and continued to assess the impact of the war with Iran, now in its sixth week, while oil prices hovered near 2022 highs. President Trump threatened to target Iran’s power plants starting Tuesday, while Iran continues striking energy infrastructure in neighboring Gulf countries. Still, reports that Iran, the US, and a group of regional mediators are discussing a potential 45-day ceasefire that could pave the way toward ending the war and news indicating that more ships are passing through the Strait of Hormuz offered some temporary relief. Meanwhile on the data front, the ISM Services PMI prices index soared to 2022-highs dur to the effects of the war with Iran. Markets have fully priced the Fed will leave the federal funds rate steady later this month and expect borrowing costs to remain unchanged throughout the year.

The yield on the US 10-year Treasury note rose to 4.36% on Monday, the highest level in about a week, as traders returned from an extended holiday and continued to assess the impact of the war with Iran, now in its sixth week, while oil prices hovered near 2022 highs. President Trump threatened to target Iran’s power plants starting Tuesday, while Iran continues striking energy infrastructure in neighboring Gulf countries. Still, reports that Iran, the US, and a group of regional mediators are discussing a potential 45-day ceasefire that could pave the way toward ending the war and news indicating that more ships are passing through the Strait of Hormuz offered some temporary relief. Investors now await a series of releases that will provide further insight into the health of the economy, including the CPI and the FOMC minutes. Markets have fully priced the Fed will leave the federal funds rate steady later this month and expect borrowing costs to remain unchanged throughout the year.

The yield on the US 10-year Treasury note rose to around 4.35% on Monday as investors weighed the latest escalations in the Iran war after President Donald Trump set a new deadline on Iran and stepped up threats against its power plants and other civilian infrastructure if the Strait of Hormuz is not reopened. Tehran rejected the latest demand and kept up strikes on energy assets across the Middle East, while keeping the critical waterway effectively shut. The ongoing conflict has pushed energy prices higher, stoking inflation concerns and fueling expectations that the Federal Reserve may pause rate cuts or even raise borrowing costs later this year. Data released during Friday’s holiday showed the US economy added 178K jobs in March, nearly triple the 60K forecast, while the unemployment rate edged down to 4.3% from 4.4%. Investors are now turning to the latest FOMC minutes for further signals on the central bank’s policy path.