Treasury yields edge higher as traders sharpen focus on rates

Treasury yields edged higher Thursday, with traders weighing prospects for interest rate hikes amid rising oil prices as Iran-Oman talks over the Strait of Hormuz came into focus.

The 10-year Treasury note yield — the main benchmark for mortgages, auto loans and credit card debt — was up more than 2 basis points at 4.641%. The longer-dated 30-year Treasury yield, which is often sensitive to geopolitical events, was also higher by more than 2 basis points at 5.20%.

The shorter-dated 2-year Treasury note yield, which tends to react to short-term Federal Reserve interest rate expectations, was more than 2 basis points higher as well, at 4.204%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

The moves came as Minneapolis Federal Reserve President Neel Kashkari told CNBC Wednesday that “now is the time” for policymakers to start raising rates, pointing to strong corporate earnings coupled with solid consumer and labor market sentiment.

Investors are now gearing up for Friday’s July nonfarm payrolls data and unemployment rate, which is forecast to show an increase of 83,000 jobs and the unemployment unchanged at 4.2%.

“Friday’s jobs report may put upside or downside pressure on bond yields, which are already at the upper end of their recent trading range,” said Clark Bellin, president and chief investment officer at Bellwether Wealth. “If bond yields get too high, that could make stocks less attractive and also keep a lid on stock prices until rates settle down.”

Investors are also watching for developments in the Middle East, with oil prices rising slightly after Iran said it had reached an understanding with Oman on shipping flows through the Strait of Hormuz.

West Texas Intermediate futures for September delivery were up nearly 1% at around $75 per barrel, while global benchmark Brent crude was up 1% at about $80.