US two-year Treasury yields surged 5.5 basis points to 4.2573% on Tuesday, leading a broad selloff across the curve. The 10-year yield rose 3.44 bps to 4.6261%, while the 30-year yield climbed 1.56 bps to 5.1281%. The move came as oil prices rose on heightened geopolitical tensions, reinforcing expectations that the Federal Reserve will maintain its restrictive stance.
US two-year Treasury yields surged 5.5 basis points to 4.2573%, leading a broad selloff that pushed the 30-year rate above 5.12%.
The 10-year yield rose 3.44 bps to 4.6261%, after touching a session high of 4.6382% at 4:44 p.m. New York time, according to Tradeweb data. The 30-year yield added 1.56 bps to 5.1281%, while the 2s10s spread narrowed 1.89 bps to plus 36.246 bps, reflecting the sharper repricing in short-dated maturities. Inflation-protected securities also rose across the curve, with the 10-year TIPS yield climbing 2.93 bps to 2.3461% and the two-year TIPS yield gaining 4.37 bps to 2.3137%.
The selloff comes as oil prices climbed on heightened geopolitical risk after President Donald Trump warned Iran "will pay" for the deaths of three American servicemen over the weekend. West Texas Intermediate crude rose 2.6% to $85.35 a barrel, its highest level since June 12, while Brent crude gained 2.5% to $91.50. Higher energy costs threaten to keep inflation elevated, reinforcing expectations that the Federal Reserve will maintain its restrictive stance. Gasoline prices have already responded, with the national average returning to $4 a gallon after falling to $3.79 in early July, according to AAA data.
The move in yields coincided with a mixed session for equities. The S&P 500 rose 0.5%, while the tech-heavy Nasdaq Composite gained 0.9% and the Dow Jones Industrial Average added 0.6%. Semiconductor stocks led the rebound, with the iShares Semiconductor ETF rising 3.5% after last week's 10% rout. SK Hynix, Intel, Micron Technology, and Marvell Technology each gained between 5% and 9%. The Cboe Volatility Index, or VIX, stood at 18.65, down from recent highs but still above its long-term median.
The dollar strengthened, with the ICE US Dollar Index rising 0.2% to 101.04, adding pressure on emerging-market currencies. The Philippine peso weakened past 61.7 against the dollar, while gold futures edged up 1.3% to $4,065 an ounce. Bitcoin traded around $66,600, up from overnight lows near $65,000, with crypto-tied stocks such as Coinbase Global and Robinhood Markets surging 11% and 8%, respectively.
The yield increase extends a trend that has seen the 10-year yield climb from around 4.40% in early July as resilient economic data and sticky inflation readings pushed back expectations for rate cuts. The two-year yield, which is more sensitive to Fed policy expectations, has risen from around 4.10% over the same period. Traders will focus on upcoming earnings from Alphabet and Tesla, due after the close Wednesday, for further clues on corporate health and capital spending plans. Intel is also set to report Thursday, with options pricing implying a potential 12% swing in either direction.
This article is for informational purposes only and does not constitute investment advice.
