U.S. Treasury yields fell on Tuesday as bond markets returned from their Memorial Day break on hopes of a Middle East peace deal, even as the U.S. military carried out a new attack on Iran.
yield of 10 years US Treasury The note, a key measure of U.S. government borrowing, fell more than 6 basis points to 4.510%.
of 2 years treasury Bond yields, which are more closely tied to the Federal Reserve’s short-term interest rate policy, fell more than 6 basis points to 4.066%. longer date 30 year treasury Bond yields fell more than 5 basis points to 5.028%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Yields fell across the board, catching up with the sharp decline in European sovereign yields seen on Monday.
But European bonds rose some on Tuesday as investors pondered mixed signals on the status of the U.S.-Iran peace talks.
The U.S. military carried out an attack in southern Iran early Tuesday that the Central Command described as “self-defense.” Secretary of State Marco Rubio, who is in India, said the Strait of Hormuz would eventually have to be opened “in some way.”
Iran’s Islamic Revolutionary Guard Corps said Tuesday it would retaliate for ongoing ceasefire violations after it identified and engaged a U.S. drone and an F-35 fighter jet that entered its airspace.
The apparent escalation in hostilities came despite President Donald Trump previously suggesting in a post on TruthSocial that negotiations were “progressing well” and a peace deal could be on the horizon.
Looking ahead, investors will be watching a number of economic indicators released later this week, including the April Personal Consumption Expenditures (PCE) price index reading, which the Fed recommends as a measure of inflation.
Bank of America is forecasting a 0.4% increase from March and a 3.8% year-on-year increase in overall PCE.
—CNBC’s Lim Hui Jie and Hugh Leask also contributed to this report.
