Yields on 10-year Treasury bonds rose to their highest level since July 2025 on Monday morning after a sharp reassessment of Fed rate cut expectations last week.
The benchmark 10-year Treasury yield was up more than 4 basis points at 4.435%, the highest in seven months. The 30-year Treasury bond yield rose just 1 basis point to 4.966%. The 2-year Treasury note yield rose more than 10 basis points to 3.997%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
“Normally in times of heightened geopolitical risk you’d expect US Treasuries to benefit from safe haven demand, but amid the general market rally over the past few years, the main mover for yields has been Fed rate expectations,” said Bradley Saunders, North America economist at Capital Economics.
“Investors are more focused on what the Iran war means for oil prices and the scope for the Fed to continue cutting, and that’s reflected in how yields have progressed in the 10 years since the war began.”
The S&P Global Flash US PMI report is due Tuesday morning, which measures the economic health of the US manufacturing and services sectors.
“Clearly, Iran is not backing down,” wrote Ben Emmons, CIO and founder of Fed Watch Advisors. “With macro effects visible for the first time in the flood of global PMI data, risk-off sentiment could deteriorate substantially this week. … Portfolio de-risking may continue, making cash a viable asset again.”
The February PMI report indicated a slowdown in business growth and employment expansion for services companies, and economists expect further softening. Readings above 50 indicate growth, and forecasts have the latest report coming in at 50.5, down from 51.9 in February.
Treasury yields were unchanged after the Iran war escalated over the weekend.
US President Donald Trump said on Saturday he would “destroy” Iran’s power plants if Tehran failed to fully reopen the strait within 48 hours.
Iran responded by escalating threats to target energy infrastructure and desalination facilities in the Gulf. Iranian Parliament Speaker Mohammad Bagher Ghalibaf also said on saturday Entities that purchase US government bonds and “fund the US military budget” would be considered legitimate targets, along with military bases.
— CNBC’s Holly Elliott and Fred Imbert also contributed to this report.
