U.S. Treasury Yields Edge Higher as Middle East Tensions Persist
Miles Bennett
The 10-year Treasury yield rose over 1 basis point to 4.558% as a ninth straight night of U.S. strikes on Iran kept risk sentiment elevated, though last week's softer-than-expected inflation data capped the move.
How much did yields move?
The 10-year yield climbed over 1 basis point to 4.558%; the 30-year rose in step to 5.078%.
The 2-year yield held roughly flat at 4.181%.
This means → the long end is more sensitive than the short end. Markets are repricing medium-to-long-term inflation expectations, not betting on a near-term rate hike.
How far has the Middle East conflict escalated?
U.S. Central Command completed a ninth consecutive night of strikes on Iran — a three-hour operation targeting military command centres, air-defence sites, and missile and drone launch positions.
The stated aim: degrade Iran's ability to attack commercial shipping in the Strait of Hormuz.
The conflict has spilled over. Iran struck back at targets in Bahrain, Saudi Arabia, and Jordan; Kuwait said its air defences were intercepting Iranian drones.
In plain terms = this is no longer a two-country exchange — the entire Gulf region is now involved.
Why didn't yields spike harder?
Last week's PPI and CPI both came in below expectations, putting a brake on rate rises.
Initial jobless claims for the week ending July 11 were 208,000, better than forecast — a sign the labour market remains resilient.
This means → economic data says "inflation pressure is manageable," while the war premium says "risk is rising." The two forces are pulling in opposite directions, which is why yields only edged up.
What comes next?
Friday brings the S&P Global flash U.S. manufacturing and services PMI — the next key data window.
PMI — the purchasing managers' index, a gauge of business confidence in future orders and output — would signal war-related drag on the real economy if it softens.
If PMI holds firm, the market will likely stay in "grinding higher but not out of control" mode.
Content is for reference only, not financial advice.