People attending a meeting of the Federal Reserve Board in Washington, DC.
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U.S. Treasury yields rose on Tuesday as investors awaited developments in negotiations between the United States and Iran, which stalled over the weekend.
The yield on the 10-year Treasury note, a key measure of U.S. government borrowing, rose more than 2 basis points to 4.36%.
The yield on the two-year Treasury note, which is more closely tied to the Federal Reserve’s short-term interest rate policy, rose more than 3 basis points to 3.838%. The yield on the 30-year government bond rose more than 1 basis point to 4.957%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
President Donald Trump and his national security team have discussed Iran’s proposal to reopen the Strait of Hormuz once the U.S. lifts the blockade and the war ends, White House press secretary Caroline Levitt confirmed on Monday.
The proposal would postpone negotiations on Iran’s nuclear program to a later date, Axios and the Associated Press reported.
It is unclear whether President Trump, who has vowed not to lift the blockade until the deal with Iran is “100% complete,” has accepted the offer that reportedly would end the two-month war. Oil prices edged higher on Tuesday as uncertainty remained over the outcome of the war.
Bond investors are also keeping an eye on the Fed’s two-day monetary policy meeting, which concludes on Wednesday. At the meeting, outgoing Fed Chairman Jerome Powell and the Federal Open Market Committee are widely expected to keep interest rates unchanged at the current 3.50% to 3.75%.
The European Central Bank (ECB) and Bank of England (BOE) will also hold important meetings as the Iran war changes the outlook for inflation and economic growth.
Both central banks are scheduled to announce their latest monetary policy decisions on Thursday, and economists expect them to keep benchmark interest rates unchanged at this month’s policy meetings, but leave the door open for rate hikes later this year.
—CNBC’s Holly Ellyatt also contributed to this report.
