U.S. Treasury yields rose on Monday as traders digested escalating tensions in the Middle East and awaited fresh data on U.S. factory activity. The benchmark 10-year Treasury yield increased by over 1 basis point to 4.3979% by 5:10 a.m. E.T., while the 2-year Treasury yield, sensitive to Federal Reserve rate expectations, climbed more than 2 basis points to 3.9107%. The 30-year Treasury note also saw a rise of over 1 basis point, reaching 4.9792%.
The uptick in borrowing costs coincided with heightened concerns surrounding the Strait of Hormuz, a critical shipping channel. President Trump announced plans for U.S. forces to provide security for commercial vessels, potentially deploying up to 15,000 troops in an operation dubbed "Project Freedom." This announcement prompted a response from Iran's foreign ministry, stating readiness to counter any U.S. threats in the waterway. Consequently, oil prices edged higher, with West Texas Intermediate (WTI) advancing 0.9% to $102.83 a barrel.
On the economic front, investors are anticipating U.S. factory order data, with consensus estimates pointing to a 0.5% increase for March. Recent data from the Institute for Supply Management (ISM) showed the April manufacturing index at 52.7, unchanged from March, while prices paid by manufacturers reached their highest level since April 2022. Later today, Federal Reserve Bank of New York President John C. Williams is scheduled to deliver a speech on monetary policy, which could further influence market sentiment.
