Treasury Yields Climb Past 4.38% as US-Iran Talks Falter

Ten-year U.S. Treasury yields climbed more than 2 basis points to 4.386% and oil prices surged Monday after President Trump rejected Iran’s response to a U.S. peace proposal, leaving the two sides in a standoff and fueling fears of prolonged supply disruptions.

"Markets remained focused on the lack of progress in negotiations between Washington and Tehran, after President Donald Trump rejected Iran’s latest proposal,” Fadi Al Kurdi at forex trading service FFA Kings, said in a note.

The diplomatic deadlock sent international benchmark Brent crude 4.3% higher to $105.66 a barrel, while the yield on the benchmark 10-year U.S. Treasury note rose 2.2 basis points to 4.385%. The WSJ Dollar Index also gained 0.2% as investors sought safe-haven assets.

The breakdown in talks extends uncertainty over the Strait of Hormuz, a critical channel for global energy supplies, reinforcing inflation expectations ahead of U.S. consumer price data due Tuesday. The standoff puts further pressure on global central banks and raises the stakes for President Trump’s upcoming meeting with Chinese President Xi Jinping.

Global Bond Selloff

The selloff in U.S. Treasurys was mirrored in Europe. The 10-year German Bund yield rose 3.1 basis points to 3.033%, while 10-year U.K. gilt yields climbed 5.6 basis points to 4.966% amid the tensions and domestic political uncertainty. "Oil price dynamics remain crucial for bond markets and should set a bearish tone at the start of the week,” Commerzbank strategists said in a note.

High Stakes Diplomacy

President Trump, who called Iran's proposal "totally unacceptable" via social media, is expected to travel to Beijing on Wednesday to meet with Chinese President Xi Jinping. The visit is seen as a critical opportunity to apply pressure on China to use its influence with Tehran to de-escalate the conflict and reopen the Strait of Hormuz, through which a significant portion of the world's oil passes. Iran's foreign ministry said Monday it had only demanded the country's "legitimate rights" and no "concessions."

This article is for informational purposes only and does not constitute investment advice.