Kevin Warsh, nominee to chairman of the Federal Reserve, testifies during his Senate Banking, Housing and Urban Affairs Committee confirmation hearing in Dirksen building on Tuesday, April 21, 2026.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
Treasury yields rose on Monday as the ceasefire agreement between the U.S. and Iran came under increasing strain, with the two sides trading strikes over the weekend and President Donald Trump reinstituting a blockade of Iranian ships using the Strait of Hormuz.
The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — gained more than 4 basis points to 4.614%.
The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, traded more than 6 basis points higher to 4.269%. The longer-dated 30-year Treasury bond yield was up 3 basis points at 5.101%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Yields moved higher after Trump said in a post on Truth Social on Monday that the U.S. is “reinstating the THE IRANIAN BLOCKADE” in the Strait of Hormuz.
“The U.S.A. will be, from this point forward, known as ‘THE GUARDIAN OF THE HORMUZ STRAIT,’ but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World,” he also wrote.
This comes after an Iranian strike on a commercial shipping vessel over the weekend led to a fresh wave of strikes from U.S. forces. Iran responded by launching an attack on American military bases in several Gulf states, deepening a standoff over the strategically vital Strait of Hormuz.
The latest exchange casts further doubt on the future of the interim peace agreement signed last month, which sought to pave the way for permanently reopening the Strait of Hormuz and ending the war after 60 days of negotiations.
Iran’s strikes targeted U.S. bases in Kuwait, Bahrain, Jordan, Oman and Qatar, according to the country’s state media outlets, which described them as retaliatory measures to renewed U.S. bombings.
Crude prices settled higher following the latest developments. Brent futures rose 9.59% to $83.30 per barrel, while West Texas Intermediate futures advanced 9.42% to above $78.14.
As concerns remain that higher oil prices could spur inflationary pressures, Fed Governor Christopher Waller said on Monday that there’s an “equally plausible” scenario where inflation remains elevated or even rises more, which would require “tighter monetary policy in the near term.”
The economic calendar this week is packed with a raft of data releases that could influence the trajectory of bond markets.
Core inflation readings are due on Tuesday, while Kevin Warsh makes his first appearance before Congress as Fed chair later that afternoon.
Consumer sentiment for July is due on Friday, which will lend some fresh insight into the strength of household finances.
“The real question is whether these reports will validate the strong spending narrative, or if mounting geopolitical risks and elevated interest rates have had a more significant impact on the consumer over the last few months,” Alex Guiliano, chief investment officer at Resonate Wealth Partners said.
— CNBC’s Sam Meredith and Jeff Cox contributed to this report.
