Traders work on the floor of the New York Stock Exchange (NYSE) on March 2, 2026 in New York City.
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of 10 year treasury Yields fell on Friday, but the decline was capped as investors bet on the impact on inflation from rising oil prices due to wars in the Middle East.
The benchmark 10-year Treasury yield fell less than 1 basis point to 4.138%. of 2 years treasury The yield fell more than 4 basis points to 3.554%.
The spread between two-year and 10-year Treasuries widened by more than 58 basis points, which may reflect higher expectations for future inflation.
One basis point equals 0.01%, and yields and prices move in opposite directions.
U.S. Treasury yields rose after President Donald Trump called for the Islamic Republic to surrender unconditionally and U.S. West Texas Intermediate soared above $90 a barrel on the seventh day of the Iran war. Brent crude, the world oil benchmark, topped $92 per barrel.
“It’s clear that higher energy prices mechanically drive headline CPI inflation higher,” Atakan Bakiskan, Berenberg’s chief U.S. economist, told CNBC’s “Squawk Box Europe” on Friday.
The average price of a gallon of regular gasoline in the U.S. on Thursday was $3.25, up nearly 27 cents from the previous week, according to data from travel group AAA.
Bond investors had expected payrolls to decline unexpectedly in February after U.S. employers unexpectedly cut 92,000 jobs in February and the unemployment rate rose to 4.4%. The Bureau of Labor Statistics expects the economy to add 50,000 jobs last month and the unemployment rate to remain unchanged at 4.3%, according to a survey of economists conducted by Dow Jones.
“Today’s numbers may have put the Fed between a rock and a hard place,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “A significant deterioration in the labor market would support rate cuts, but the Fed may feel forced to stay on the sidelines given the risk that a prolonged rise in oil prices could trigger another surge in inflation.”
San Francisco Federal Reserve President Mary Daley told CNBC’s “Squawk Box” on Friday that a single month’s jobs report does not determine the direction of the Fed’s policy, saying she would rather focus on the two-month average of January and February, when economic growth was revised downward and added 126,000 new jobs.
The market odds of another quarter-point rate cut in July rose slightly to 43.4%, compared with a 38.9% chance the Fed would remain unchanged at that meeting, according to the CME FedWatch tool.
—CNBC’s Jeff Cox, Spencer Kimball, Chloe Taylor, Sam Meredith, Dan Mangan and Justin Zacks contributed to this report.
