Yeilding results, U.S. Treasury yields touch highest since July as Trump extends key Iran deadline

Benchmark U.S. Treasury yields jumped to their highest level since July on Friday, as investors assessed a fresh increase in oil prices despite President Donald Trump’s extension of deadline for U.S. attacks on Iranian energy infrastructure.

By 07:04 ET (11:04 GMT), the yield on U.S. 10-year Treasury notes had climbed to 4.46%, an uptick of roughly 4 basis points. On Thursday, the 10-year added 9 bps. Yields tend to move inversely to bond prices.

U.S. government bonds have been hit hard by the effective closure of the Strait of Hormuz, a vital waterway off of Iran’s southern coast through which roughly a fifth of the world’s oil flows. Crude prices remain well above levels before the start of the conflict in late January, fueling concerns over a spike in inflationary pressures in countries around the world.

Markets have in turn all but erased expectations for Federal Reserve interest rate reductions this year and have even begun to contemplate possible borrowing cost hikes in the months ahead. Fed policymakers left rates unchanged at a meeting last week but noted the threat of possibly accelerating inflation due to the energy shock.

The OECD warned on Thursday of the impact of higher price gains on global economic growth, highlighting the potential for faster inflation in the U.S. in particular.