Treasury yields were little changed Thursday after Iranian strikes on a U.S. military base earlier in the session sent oil prices higher, while new U.S. data reflected persistent inflation.
The yield on the 10-year U.S. Treasury note — the main benchmark for mortgages, auto loans and credit card debt — was flat on the day at 4.479%.
The 2-year Treasury note yield, which is more sensitive to short-term Federal Reserve interest rate decisions, ticked higher by nearly 1 basis point to 4.041%. The longer-dated 30-year Treasury bond yield, which typically reacts to political risks, was less than 1 basis point lower at 5.006%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
WTI crude traded 2.5% higher at $90.89 per barrel. Brent climbed 2% to $96.21.
Elevated oil prices have led to growing inflation fears, leading traders to pare down expectations for Federal Reserve rate cuts. New data released Thursday pointed to elevated price pressures
The personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 3.8% in April from the year-earlier period. And while yields pared gains after the data was in line with expectations, some on the Street are concerned about the persistent inflationary pressures.
“If Washington economic officials were looking for evidence to back up claims there is no cost-of-living crisis in America, they will have to look elsewhere because PCE consumer inflation is still heating up in April as the Iran war pushes energy costs sharply higher,” Chris Rupkey, chief economist at FWDBonds.