Treasury yields stayed lower early Tuesday after the attack on Israel over the weekend sparked market turmoil.
Investors may have bought U.S. bonds in a flight to safety. They may also have been responding to comments from Federal Reserve officials Monday that suggested the central bank may not need to raise interest rates again soon.
Bond yields are a reflection of how markets see interest rates moving in the future. Yields have been lower on longer-term bonds than shorter-term ones since July last year, but the gap has recently narrowed on expectations of rates staying higher for longer. The bond market was closed for trading Monday for the Columbus Day holiday.
The benchmark 10-year Treasury bond yield fell from 4.8% to below 4.7%. The two-year note yield dipped to just below 5%. The 30-year bond yield fell from 4.97% to 4.86%.
What happens next will depend in part on whether the renewed violence in the Middle East is seen as bad for the economy, which would imply lower yields, or as a fresh driver of inflation, which could keep yields higher. For now, it’s probably too soon to tell.
Write to Brian Swint at brian.swint@barrons.com
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