US Treasury Yields Climb Amid Escalating US-Iran Tensions and Rising Crude Prices

US Treasury yields climbed on Monday as tensions between the US and Iran escalated after military attacks resumed. Crude oil prices jumped following reports of US forces striking Iranian launchers, prompting a response from Iran.

The increase in crude prices has raised concerns about inflation, with investors weighing when the Federal Reserve will raise interest rates to combat rising costs. Fed Chair Kevin Warsh's comments last week that policymakers would need to take action if inflation doesn't return to its 2% target have boosted expectations for a September rate hike.

The yield on the benchmark US 10-year Treasury note rose 3.8 basis points to 4.764%, its highest since January 15, 2025. The two-year Treasury yield fell 0.6 basis point to 4.344% as investors attempted to gauge when the Fed will raise interest rates.

Scott Bessent, US Treasury Secretary, emphasized growth in a message to G20 finance leaders, saying that countries must grow their way out of debt. Meanwhile, JoAnne Bianco, partner and senior investment strategist at BondBloxx Investment Management, noted that high crude prices complicate the inflation picture.