By Treasury yields rose slightly on Tuesday as U.S. President Donald Trump issued his latest warning against Iran.
The 10-year U.S. Treasury note yield — the key benchmark for mortgages, auto loans and credit card debt — rose 1.4 basis points to 4.542%. The 2-year Treasury note yield, which is typically more sensitive to short-term Federal Reserve interest rate decisions, picked up 1.5 basis points to 4.139%.
Meanwhile, the longer-dated 30-year Treasury bond yield, which tends to react mainly to geopolitical risks, posted a gain of 1.1 basis points to yield 5.022%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Yields had been little changed but moved higher after Trump posted on Truth Social that Iran will “pay the price” for taking “too long to negotiate a deal that would have been great for them.”
Ahead of the latest inflation report, due Wednesday from the Bureau of Labor Statistics, traders were digesting the latest read on existing U.S. home sales from the National Association of Realtors.
Existing home sales in May rose 3.2% from April, to an annualized rate of 4.17 million units, which was a better-than-expected rebound. Mortgage rates had pulled back slightly in April, helping to boost demand.
Traders also digested April’s reading the goods and services imbalance, which came in at $55.9 billion. That signified a decline of $700 billion from March and was below the $56.1 billion that economists polled by Dow Jones were looking for.
“The good news is that the trade picture is moving into better balance at the start of the second quarter as tariffs keep the growth of imports down relative to surprising strength seen in exports,” said Chris Rupkey, Fwdbonds chief economist. “The bad news is the export growth looks uncertain as much of it appears to be the result of higher energy prices from the Iran conflict.”
“There is a chance that trade could add to real GDP growth in the second quarter although it would be a modest contribution,” he added.
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