US Treasury yields rose Friday afternoon, on track to snap a four-day losing streak after Israel’s strike on Iran shocked markets, pushing oil prices higher and pressuring stocks.
Israel struck Iranian targets on Friday for a second night in what it said was a move to block Tehran from developing nuclear weapons.
The attack on multiple targets sparked a surge in oil prices and rekindled inflation concerns, which overshadowed economic and trade news earlier in the week that boosted demand for US sovereign debt and pushed yields lower.
Consumer data from the University of Michigan also showed an unexpectedly large jump in sentiment and expectations. However, markets appeared to show little interest in light of the unfolding violence in the Middle East.
Earlier in the week, yields had fallen on cooler-than-expected consumer inflation data, reported progress in reaching a detente in US-China trade relations and signs of deepening weakness in the US labor market.
Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income, said that rather than a typical flight to safety in US sovereign debt, the rising yields instead pointed to markets better positioned to absorb an outburst of violence in the Middle East.
When Iraqi leader Saddam Hussein invaded Kuwait in 1990, for example, the United States was in recession and oil supplies were tighter, he said.
