Treasury yields muted as U.S.-Iran ceasefire strained; investors await core inflation data

• The 10-year Treasury yield held steady at 4.473%, while crude oil prices rose over 2.5% following Iranian strikes on U.S. military bases in Kuwait, Bahrain, Jordan, Oman and Qatar
• The weekend attacks cast doubt on last month's interim peace agreement aimed at reopening the Strait of Hormuz after 60 days of negotiations
• Key economic data this week includes Tuesday's core inflation readings and Friday's consumer sentiment report, which will reveal whether geopolitical risks and elevated rates have impacted household finances

Summary:

Treasury yields remained largely flat on Monday as U.S.-Iran tensions escalated, threatening a recently signed ceasefire agreement. The 10-year Treasury yield held steady at 4.473%, the 2-year yield rose 1 basis point to 4.223%, and the 30-year yield was unchanged at 5.071%.

Geopolitical Developments:

Over the weekend, Iran struck a commercial shipping vessel, prompting U.S. retaliatory strikes. Iran responded by attacking American military bases in Kuwait, Bahrain, Jordan, Oman, and Qatar, deepening the standoff over the Strait of Hormuz. These developments cast doubt on the interim peace agreement signed last month aimed at reopening the strait after 60 days of negotiations.

Market Impact:

Crude oil prices rallied in early trading, with WTI crude rising 2.8% to $78.11 per barrel and Brent advancing over 2.5% to $73.25, reflecting supply concerns amid Middle East tensions.

Key Economic Calendar:

Investors await critical data releases this week that could influence bond market direction:

• Core inflation data due Tuesday
• First Congressional appearance by new Fed Chair Kevin Warsh on Tuesday afternoon
• Consumer sentiment data for July on Friday

Market Outlook:

According to Alex Guiliano, CIO at Resonate Wealth Partners, the central question is whether upcoming reports will confirm strong consumer spending or reveal that geopolitical risks and elevated interest rates have significantly impacted household finances. The combination of geopolitical uncertainty and key economic data releases is expected to drive market volatility in the coming days.