Treasury yields rise as oil gains and U.S.-Iran tensions fuel inflation fears
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., Aug. 5, 2026.
Jeenah Moon | Reuters
Treasury yields rose on Tuesday, with long-dated yields surging to their highest level in over two decades, as tensions between the U.S. and Iran persisted.
The early hours of Tuesday morning saw yields on U.S. 30-year Treasury yields add over 1 basis point to trade at around 5.322%, hovering just below the highest level since 2002.
The 10-year Treasury note yield — the main benchmark for mortgages, auto loans and credit card debt — was more than 1 basis point higher at 4.736%.
The yield on the 2-year Treasury note, which typically reacts in line with short-term Federal Reserve interest rate decisions, was flat at 4.186%.
Long-term Treasury yields are trading at multi-decade highs.
One basis point equals 0.01%, and yields and prices move inversely to one another.
Oil prices rose as the 60-day deadline for the U.S. and Iran to secure a peace deal expired Monday, with Iran ruling out the possibility of an extension, according to state media. A senior Iranian official also told Reuters that Tehran would take an offensive stance if diplomacy with the U.S. fails.
“Markets have seen growing weakness over the last 24 hours, with bonds and equities slipping thanks to negative geopolitical headlines from the Middle East,” Deutsche Bank’s Jim Rid wrote in a note on Tuesday. “There wasn’t a single catalyst for the declines, but with few signs of the US and Iran coming to any sort of a deal, that meant investors priced in a more extended closure of the Strait of Hormuz.”
Resurging fears around inflation are sending government borrowing costs higher across the globe, with many longer-maturity bond yields hovering near multi-decade highs.
The yield on Japan’s long-dated government bonds hovered near levels reached in May, when yields hit 40-year highs. Germany’s 30-year bond yield was last seen at its highest since 2011, while their British counterparts approached a multi-decade high. French 30-year government bond yields also ticked upward to a post-2008 high.
On the economic data front, investors will look to import and export pricing figures for July, along with housing starts and pending home sales on Tuesday.
— CNBC’s Chloe Taylor also contributed to this report.
