Treasury yields rise as Trump reiterates Iran infrastructure threat, sending oil higher

U.S. Treasury yields rose on Tuesday as President Donald Trump again warned the U.S. would strike Iranian civilian and energy infrastructure if Tehran did not agree to reopen the Strait of Hormuz before a looming deadline.

The 10-year Treasury yield — the benchmark for U.S. government borrowing — was more than 1 basis point higher in early trade, at 4.3466% by 3:40 a.m. E.T.

Yields on the 2-year Treasury note, which are more sensitive to short-term Federal Reserve rate decisions, were also up by 1 basis point, at 3.8622%. The 30-year bond yield, meanwhile, rose 1 basis point, reaching 4.9060%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

The rise in the cost of borrowing followed President Donald Trump’s repeated threat to bomb Iranian infrastructure, including power plants and bridges, if Tehran did not reopen the Strait of Hormuz by 8:00 p.m. ET on Tuesday.

President Trump said it was “highly unlikely” he would extend the deadline further, and warned of “the complete demolition” of Iran’s critical infrastructure should a deal not be reached.

Iranian officials have rejected plans for a temporary ceasefire and have instead called for a permanent end to the conflict.

Energy prices have notched higher as Tuesday’s deadline approaches. Brent crude, the global benchmark, rose 1.4% in early dealmaking, reaching $111.27 a barrel. U.S. West Texas Intermediate was last seen 2.1% higher at $114.81.

The rally in U.S. Treasurys came after yields had steadied on the back of a more positive-than-expected nonfarm payrolls data published on Friday.

Several Treasury officials will be speaking on Tuesday. Chicago Federal Reserve president and CEO Austan Goolsbee will be speaking at the Detroit Economic Club on Tuesday. On Monday, Goolsbee said inflation remains a greater challenge for the U.S. economy than employment. Federal Reserve vice chair Philip Jefferson will also speak later on the outlook for the economy and labor market.

Investors will be monitoring U.S.-manufactured durable goods orders data releases for February, which are expected to come in lower than the flat print for January.

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