Treasury yields fell sharply Monday morning, reversing course after President Donald Trump said further military strikes against Iran had been postponed after productive negotiations between the warring sides.
The 10-year Treasury note fell 4 basis points to 4.352% around 7:30 a.m. ET. Earlier in the session, the benchmark security hit its highest level since July 2025 as traders had feared the Federal Reserve wouldn’t be lowering interest rates this year and actually could hike as their next move.
Other yields also fell. The policy-sensitive 2-year note was off 3.6 basis points to 3.86%, while the 30-year bond was off nearly 6 basis points at 4.901%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
“Typically in times of heightened geopolitical risk you’d expect U.S. Treasurys to benefit from safe haven demand, but amid the general market rally over the past couple of years, the main mover for yields has been Fed rate expectations,” said Bradley Saunders, North America economist at Capital Economics.
“Investors have focused more on what the Iran war means for oil prices and the Fed’s scope to continue cutting, and that’s reflected in how the 10-year has risen since the war began.”
The economic data docket is mostly bare this week. The S&P Global Flash U.S. PMI report is due Tuesday morning, which measures the economic health of American manufacturing and services sectors.
February’s PMI report indicated a slowdown of business growth for services firms and employment expansion, and economists expect further softening. A reading above 50 tends to indicate growth, and forecasts predict the latest report to come in at 50.5, down from 51.9 in February.
Traders have been worried over the hostilities in the Middle East. Trump had said Saturday that he would “obliterate” Iran’s power plants if Tehran failed to fully reopen the Strait within 48 hours.
Iran responded by escalating threats to target energy infrastructure and desalination facilities in the Gulf. Iranian Parliament speaker Mohammad Bagher Ghalibaf also said Saturday that entities that purchase American government bonds and “finance the U.S. military budget” would be considered legitimate targets, alongside military bases.
— CNBC’s Jeff Cox, Holly Ellyatt and Fred Imbert also contributed to this report.