Treasury yields barely moved on Tuesday as traders weighed Middle East tensions against Wednesday's July inflation report. Oil prices rose after Iran repeated that it would not reopen the Strait of Hormuz, while investors awaited the consumer price index print.
The 10-year Treasury yield fell less than 1 basis point to 4.692%, keeping the benchmark for mortgages, auto loans and credit card debt roughly flat. The 2-year Treasury yield slipped more than 1 basis point to 4.224%. The 30-year yield eased less than 1 basis point to 5.241%. Yields and prices move inversely, and one basis point equals 0.01%.
Middle East tensions weigh on sentiment
Hopes for a deal ending the Middle East conflict appeared to fade this week, after President Donald Trump responded to Iranian demands for reparations by suggesting Tehran itself must pay the U.S. compensation for the war. An Iranian official also reiterated that the Strait of Hormuz would not reopen unless its conditions were met.
Oil prices rise on Hormuz standoff
U.S. West Texas Intermediate futures settled 1.3% higher at $83.20 a barrel. Brent crude rose 1.4% to $88.91 a barrel. Government bond yields had finished Monday's session higher, with both the 10-year and 30-year notes up 4 basis points that day.
All eyes on Wednesday's CPI
Traders are now looking to the July consumer price index report due Wednesday for a clearer read on the economy. Economists polled by Dow Jones expect a 0.1% monthly increase, with the annual rate at 3.4%. Core CPI, which excludes food and energy, is projected to show a 0.2% monthly gain and a 2.5% annual rate.
According to CNBC, Keith Buchanan, senior portfolio manager at Globalt Investments, said: "CPI does set the stage." He added that if the reading comes in as expected and contained, or not, traders will start to see the long end of the Treasury curve shift higher.
Source: International: Top News And Analysis
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