The yield on the US 10-year Treasury note climbed back above 4.37% on Tuesday, reversing part of the previous session’s decline as Iran denied any talks to end the conflict, pushing back against President Donald Trump’s claims. Tehran also reported new attacks on US targets, while Israel continued strikes against Iran, keeping tensions elevated. On Monday, Treasury yields had retreated after Trump postponed planned strikes on Iranian energy infrastructure for five days, citing productive discussions with Iran over the past two days. The outcome of any talks and the potential reopening of the Strait of Hormuz remain highly uncertain, while Middle Eastern energy capacity may take time to return to prior levels. This raises the risk of higher inflation in the coming months and the possibility of interest rate hikes from major central banks. Investors now turn their focus to upcoming US manufacturing data for fresh cues on how businesses are faring under heightened geopolitical risks.
