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Treasury yields rose on Thursday, with traders reacting to rising oil prices as Iran-Oman talks over the status of the Strait of Hormuz continued.
The 10-year Treasury note yield — the main benchmark for mortgages, auto loans and credit card debt — was up more than 4 basis points at 4.664%. The longer-dated 30-year Treasury yield, often sensitive to geopolitical events, was higher by more than 3 basis points at 5.208%.
The shorter-dated 2-year Treasury note yield, which tends to react to short-term Federal Reserve interest rate expectations, was more than 6 basis points higher, at 4.243%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
Investors are watching for developments in the Middle East, with oil prices rising after Iranian state news agency Fars published a draft plan that would ban U.S. and Israeli ships from passing through the key entranceway to the Persian Gulf.
West Texas Intermediate futures for September delivery climbed almost 3%, settling at $77.29 per barrel, while global benchmark Brent crude rose nearly 4% to close at $82.49.
Treasury Secretary Scott Bessent had told CNBC earlier this week that the U.S. and Iran may reach a deal on Tuesday or Wednesday to reopen the strait with “freedom of movement” for ships.
Bond traders were also gearing up for Friday’s July nonfarm payrolls data and unemployment rate, forecast to show an increase of 83,000 jobs and an unchanged jobless rate of 4.2%.
“Friday’s jobs report may put upside or downside pressure on bond yields, which are already at the upper end of their recent trading range,” said Clark Bellin, president and chief investment officer at Bellwether Wealth. “If bond yields get too high, that could make stocks less attractive and also keep a lid on stock prices until rates settle down.”
