Treasuries yields climb, set for monthly gains on Iran war, Fed uncertainty

The yield on the benchmark U.S. 10-year Treasury note rose 6.2 basis points to 4.725%, on track for a second straight weekly gain and is up about 30 basis points for the month, its biggest monthly rise since the start of the Iran war. The yield on the 30-year bond rose 5.4 basis points to 5.261% and is on track for its fourth weekly rise in the past five. The monthly rise of about 35 basis points would mark its largest since December 2024. Rate expectations for the Fed have whipsawed in recent weeks, in part due to the volatility in oil prices, which has caused inflation concerns to oscillate. Markets are now pricing in a 65% chance for a rate hike of at least 25 basis points from the Fed at its September meeting, according to CME FedWatch, down from the 81.9% a week ago but up slightly from the 63.4% on Thursday. The rise in longer-dated yields accelerated this week, after the Fed's policy meeting left rates unchanged, though three of the 12 policymakers dissented in favor of a rate hike. Comments from Chairman Kevin Warsh gave no guidance about the path of central bank policy aside from another pledge to bring down inflation, adding to uncertainty around the Fed outlook. "I don't really think Warsh wants to raise rates, just generally, so I think that's going to be a constant fight at the Fed, getting everybody on the same page," said di Galoma. Dallas Federal Reserve President Lorie Logan said that without "modest action in the near term," the U.S. central bank will not be able to get inflation back on track to its 2% target, given a solid labor market that is strengthening and upside risks to price pressures. In addition, Minneapolis Federal Reserve President Neel Kashkari said he dissented at this week's Fed policy meeting in favor of a quarter-percentage-point interest rate increase because he would prefer to start a potential series of small adjustments now to contain inflation while Bank of Cleveland President Beth Hammack said that she voted for a rate hike and against the central bank consensus this week because inflation is too high. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 43.9 basis points after climbing to 44.6, its highest since May 29. A steepening curve signals market expectations for an economic expansion, but also the possibility for an acceleration in inflation. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, rose 5.4 basis points to 4.283% but is down slightly for the week. The two-year yield is set for its fifth straight monthly gain, which would mark its longest streak of gains since a nine-month run that ended in April 2022. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities was last at 2.258% after closing at 2.248% on Thursday. The 10-year TIPS breakeven rate was last at 2.269%, indicating the market sees inflation averaging about 2.3% a year for the next decade. **NEW YORK, July 31 (Reuters)** - U.S. long-term bond yields were poised for monthly gains, with the 30-year yield hitting a new 19-year high, as investors grappled with confusion around the U.S.-Iran conflict and the policy outlook for the Federal Reserve. U.S. President Donald Trump said talks in Cairo between mediators and Hamas leaders on Thursday have led to a phased disarmament agreement in Gaza, but a Hamas official described the deal as a draft and U.S. officials said Israel was skeptical the militant Palestinian group would surrender its weapons. U.S. crude rose 2% to $85.26 a barrel and Brent advanced to $89.96 per barrel, up 1.04% on the day, as reports that some tankers were forced to turn around in the Strait of Hormuz prompted traders to reassess shipping flows through the key waterway.

Treasuries yields climb, set for monthly gains on Iran war, Fed uncertainty

Long-term yields set for sizable monthly gains

Fed meeting and policy comments add to rate uncertainty

Yield curve steepens and inflation breakevens edge higher

U.S. bond yields rise as investors weigh Iran conflict and Fed outlook

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