U.S. Treasury yields were almost flat on Monday after tensions escalated over a cease-fire agreement between the United States and Iran, which saw both sides strike over the weekend.
The yield on the 10-year Treasury note, a key indicator of U.S. government borrowing, was little changed at 4.473%.
The yield on two-year Treasuries, which is more closely tied to the Federal Reserve’s short-term interest rate policy, rose more than 1 basis point to 4.223%. The yield on 30-year government bonds remained unchanged at 5.071%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
The new wave of attacks by the U.S. military follows Iran’s attack on a commercial ship over the weekend. In response, Iran launched attacks on US military bases in the Gulf, deepening the conflict over the strategically important Strait of Hormuz.
The exchanges cast further doubt on the future of the interim peace agreement signed last month, which aims to permanently reopen the Strait of Hormuz and pave the way for an end to the war after 60 days of negotiations.
Iranian airstrikes targeted U.S. military bases in Kuwait, Bahrain, Jordan, Oman and Qatar and were in retaliation for renewed U.S. bombing, Iranian state media said.
Oil prices rose in early trading. Brent futures rose 2.8% to $78.11 a barrel, and West Texas Intermediate futures rose more than 2.5% to $73.25.
This week’s economic calendar features a slew of data releases that could affect the trajectory of bond markets.
Core inflation is expected to be released on Tuesday, and Kevin Warsh will appear before Congress for the first time as Fed chairman later that afternoon.
Consumer sentiment for July is expected to be released on Friday, which will provide fresh insight into the strength of household finances.
“The real question is whether these reports confirm the strong spending story, or whether heightened geopolitical risks and rising interest rates have had a greater impact on consumers over the past few months,” said Alex Guiliano, chief investment officer at Resonate Wealth Partners.
— CNBC’s Sam Meredith also contributed to this report.
