Yields Retreat Amid Escalating Iran-US Tensions
The US yields retreated from earlier highs on Tuesday after two consecutive upward sessions, but long-term borrowing costs in major economies remain at their highest levels in decades.
This comes as the Iran-US conflict continues to escalate, with US President Donald Trump stating that no talks are taking place with Iran and none are scheduled. The Strait of Hormuz remains closed to shipping, according to Iranian assertions, but Trump insists it is open.
The Federal Reserve reported a 0.2% growth in July for US industrial production, which undershot economists' expectations due to a decline in consumer goods production. Markets are parsing the latest developments in the conflict and awaiting the release of minutes from the most recent Federal Open Market Committee meeting on Wednesday.
Oil prices have surged as a result of the conflict, pushing energy costs higher. The US diesel crack has surged above $100 a barrel for the first time, affecting industries that rely on diesel. Long-term borrowing costs in developed countries are reaching unsustainable levels, with the US debt pile nearing $40 trillion.