U.S. Treasury Yields Rise Amid Stalled U.S.-Iran Peace Talks

U.S. Treasury yields increased as peace talks between the United States and Iran showed signs of stalling, raising concerns about rising energy costs and potential inflation. According to Jin10, the sell-off on Monday led to a rise in yields in the $31 trillion U.S. Treasury market, with the 10-year Treasury yield climbing approximately 6 basis points to nearly 4.5%, while crude oil prices surged over 7%. The two-year Treasury yield, which is most sensitive to Federal Reserve policy expectations, also rose about 6 basis points to 4.07%. This development followed Iran's decision to suspend indirect talks with the U.S. in protest of Israeli actions. Traders have increased their expectations that the Federal Reserve's next move will be a rate hike. The swap market indicates that traders have fully priced in a rate hike by March 2027, with a 50% chance of a hike as early as October.