US Treasury bond prices declined slightly on July 21 (US Eastern Time) at 9:03 AM, with the 10-year yield rising 0.60 basis points to 4.604%. The price movement occurred as the US-Iran military conflict entered its tenth day with no clear signs of de-escalation. The yield increase reflects ongoing geopolitical uncertainty in the Middle East, where Yemen Houthi rebels have declared participation and Iran continues attacks on Kuwaiti infrastructure while both the US and Iran signal continued dialogue possibilities.
10-Year Treasury Yield Rises to 4.604% on July 21
According to Yonhap Infomax's overseas interest rate intraday screen, the 10-year Treasury yield stood at 4.604% as of 9:03 AM on July 21 (US Eastern Time) in the New York bond market, up 0.60 basis points from the previous trading day's 3 PM reference rate. The policy-sensitive 2-year yield rose 0.40 basis points to 4.219% during the same period. The 30-year Treasury yield increased 0.40 basis points to 5.121%. The spread between 10-year and 2-year yields remained nearly unchanged at 38.5 basis points compared to the previous day's 38.3 basis points. Bond yields and prices move in opposite directions.
Iran Attacks Kuwaiti Facilities as Houthi Rebels Join Conflict
The Middle East conflict shows no signs of subsiding. Kuwait announced that Iran attacked power plants and desalination facilities with missiles and drones for the fourth day. The Houthi rebels declared a Red Sea blockade against Saudi Arabia and warned that anyone using Saudi ports would become a target anywhere. Iran also considers the current situation a full-scale war and is retaliating against US military bases in the Gulf region. However, the US has not expanded its operational scope to Tehran, and both sides continue to signal the possibility of dialogue. These factors are interpreted as moderating the pace of US Treasury yield increases.
BMO Capital Markets Notes Treasury Market Stability Amid Middle East Tensions
BMO Capital Markets strategists stated that "despite recent escalating Middle East tensions, the Treasury market has shown a relatively stable trend." They noted that "news of mediators presenting new ceasefire proposals appears to have contributed to curbing the rise in oil prices." BMO added that "the decline in nominal bond yields will be limited by geopolitical tensions and the market's continued focus on the energy sector," and that "July and August inflation indicators will be needed for investors to conclude that energy-driven inflationary pressures have peaked."
FAQ
What happened to US Treasury yields on July 21?
US Treasury yields rose slightly on July 21 (US Eastern Time) at 9:03 AM, with the 10-year yield increasing 0.60 basis points to 4.604%, the 2-year yield rising 0.40 basis points to 4.219%, and the 30-year yield climbing 0.40 basis points to 5.121%.
Why are US Treasury yields rising despite the US-Iran conflict?
The yield increase reflects ongoing geopolitical uncertainty as the US-Iran military conflict entered its tenth day with no clear resolution. However, the pace of yield increases remains moderate because the US has not expanded operations to Tehran and both sides continue to signal dialogue possibilities, which prevents a more dramatic flight-to-safety bond rally.
