Bond Market Update

Losses Widened as Oil Climbs

• U.S. Treasuries have widened their losses with investors once again keeping a close eye on the price of oil, which has been on the rise after ongoing fighting between the U.S. and Iran. President Trump said today that the U.S. will secure the Strait of Hormuz and charge a toll, adding to the ongoing uncertainty. Treasuries spent the first couple hours of action near their starting levels, but the front end took the lead during a mid-morning retreat, which took place as oil climbed toward $75/bbl. With today's selling, yields on the 5-yr note and shorter tenors are on course to settle at fresh highs for the year while the 10-yr yield is now within ten basis points of its peak from May (4.687%). Equities remain in the red with the S&P 500 (-0.8%) giving back the bulk of its remaining July gain.
• Yield Check:
  • 2-yr: +7 bps to 4.28%
  • 3-yr: +7 bps to 4.31%
  • 5-yr: +6 bps to 4.37%
  • 10-yr: +5 bps to 4.61%
  • 30-yr: +3 bps to 5.10%