Treasury yields edge lower as Middle East conflict remains in focus

Treasury yields edged lower again on Tuesday as traders monitor the latest developments in the Middle East and the potential impact on borrowing costs.

The yield on the 10-year U.S. Treasury note — the benchmark for government borrowing — dropped by less than 1 basis point to 4.293%.

The 2-year Treasury note yield, which is more sensitive to short-term Federal Reserve interest rate decisions, was more than 1 basis point lower at 3.77%. The longer-dated 30-year Treasury bond yield was down by less than 1 basis point at 4.897%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

The slide comes after Treasury yields edged lower on Monday amid renewed optimism over a potential lasting resolution to the conflict following last week’s uneasy ceasefire agreement.

Energy prices fell on Tuesday. West Texas Intermediate last traded above $97 per barrel as investors weighed the impact of the U.S. blockade on the Strait of Hormuz aimed at forcing Iran to reopen the vital shipping lane.

Meanwhile, new wholesale inflation data published later is expected to show a 1.3% rise in producer prices during March.

The U.S. Bureau of Labor Statistics’ monthly Producer Price Index, which tracks the average changes in prices received by domestic producers, in areas such as transportation, warehousing and construction, rose 0.7% during February, above consensus estimates of 0.3%.

The latest data points come as investors continue to gauge the lasting impact of the U.S.-Iran conflict on inflation and the direction for interest rate policy at the Fed.