U.S. Treasury yields edge higher as Middle East tensions escalate

U.S. Treasury yields edged higher on Monday as Wall Street monitors the latest developments amid escalating tensions in the Middle East.

• The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — rose over 1 basis point to 4.558%.
• The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, was broadly flat at 4.181%.
• The longer-dated 30-year Treasury bond yield rose over 1 basis point to 5.078%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

U.S. Military Operations Continue

U.S. Central Command completed the ninth consecutive evening of strikes against Iran at 10 p.m. ET on Sunday, Centcom said in a post on X.

The three-hour exercise targeted:

• Iranian military command centers
• Air defense and coastal surveillance sites
• Maritime capabilities
• Missile and drone launch sites

Centcom said the operation was intended to further diminish Tehran's ability to attack commercial vessels and civilian mariners transiting the Strait of Hormuz.

Escalating Regional Impact

U.S. strikes have widened in recent days, with Tehran reporting strikes on civilian infrastructure, including the Bonji desalination plant, which cut off water supplies to approximately 10,000 people.

Tehran has retaliated across the Gulf with fresh attacks on targets in neighboring countries, including Bahrain, Saudi Arabia, and Jordan. The Kuwaiti army said Monday that its air defense systems were intercepting "hostile" drone attacks from Iran.

Economic Data and Market Outlook

Treasury yields eased off last week as investors digested a raft of data releases indicating that the U.S. economy continues to withstand inflationary pressures caused by the Iran war.

Last week's slide in borrowing costs followed cooler-than-expected producer and consumer price data, while U.S. jobless claims for the week ending July 11 came in lower than forecasted, at a seasonally-adjusted 208,000.

On Friday, investors will be monitoring the latest S&P Global Flash U.S. PMI report, which measures the economic health of American manufacturing and services sectors.

— CNBC's Anniek Bao and Sean Conlon also contributed to this report.

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