En
EsTreasury yields steady near highs as mideast risks sway oil
U.S. Treasury yields were little changed Tuesday, with the 10-year near 4.59%, while markets weighed Houthi threats to Saudi shipping and signs of U.S.-Iran contacts that pulled crude off highs.
U.S. Treasury yields held near multi-week highs on Tuesday as investors assessed Middle East shipping risks and volatile oil prices. The 10-year note traded around 4.59%, the two-year hovered near 4.2%, and shorter-dated benchmarks were close to 5.1%. Yields were little changed from Monday, when they posted the biggest daily rise in nearly a month.
Recent selling in Treasuries has tracked a pickup in tensions involving U.S. forces and Iran that lifted crude to six-week highs. Shipping concerns intensified after Yemen’s Houthi movement announced a naval blockade of Saudi Arabia, days after a commercial tanker caught fire near the Strait of Hormuz. Oil at higher levels can feed headline inflation, which can lift bond yields.
Upward pressure on yields eased later on Tuesday after crude pulled back from intraday highs following reports of open channels and ceasefire proposals between the United States and Iran. Treasury trading stabilized alongside the retreat in oil.
A gauge of near-term interest rate expectations hovered around 2.78% after reaching 2.817% on Monday, the highest level in 28 months. These expectations are closely tied to the Fed rate, which has the strongest direct influence on short-dated Treasury yields.
European government bonds were steady as well. The region’s 10-year benchmark yield was flat to slightly higher around 3.16% ahead of Thursday’s European Central Bank decision. Swap pricing indicated expectations for more monetary tightening by early 2027, with a September increase largely priced. ECB President Christine Lagarde is widely expected to keep the deposit rate unchanged at 2.25% on Thursday.
Short-dated European yields have been supported by a renewed link between front-end rates and crude prices. Corporate survey data point to moderating selling prices and wage growth, while refined energy products continue to pass through to transport and manufacturing costs.
Trading remained confined to recent ranges on Tuesday, with investors cautious after Monday’s rise in yields and ongoing shipping headlines in focus.
