U.S. Treasury yields moved higher on July 13 as renewed tensions involving Iran pushed up oil prices and led traders to reassess the Federal Reserve’s path. The policy-sensitive 2-year Treasury yield rose as much as 3 basis points to 4.24%, its highest level since February 2025, while the benchmark 10-year yield also gained 3 basis points to 4.59%. Swaps data showed markets were now almost fully pricing in a Fed rate hike in September, up from about a 66% probability a week earlier. Kenneth Crompton, head of rates strategy at National Australia Bank, said markets had become sensitive again to headlines related to Iran. He added that investors were not expecting a repeat of the tensions seen in March, but weekend attacks and strikes targeting Russian refining facilities had revived a degree of caution in market sentiment. The move highlights how geopolitical developments are feeding into inflation expectations through energy prices and, in turn, shaping interest-rate bets.
U.S. Treasury yields climbed on July 13 after renewed tensions involving Iran lifted oil prices and prompted fresh bets that the Federal Reserve may need to raise rates to contain inflation.
The 2-year Treasury yield, which is highly sensitive to interest-rate expectations, rose as much as 3 basis points to 4.24%, the highest since February 2025. The benchmark 10-year Treasury yield also added 3 basis points, reaching 4.59%.
Swaps data showed the market had now almost fully priced in a Fed rate hike in September, compared with about a 66% probability one week earlier.
Kenneth Crompton, head of rates strategy at National Australia Bank, said markets were highly sensitive to news related to Iran. “The market was not expecting a repeat of the tensions seen in March, but given the attacks over the weekend and the strikes on Russian refining facilities, a degree of caution is starting to creep back into sentiment,” he said.
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