U.S. Treasury yields held steady Friday morning after President Donald Trump pledged that the United States would not launch attacks on Iran before the upcoming midterm elections.
The yield on the 10-year U.S. Treasury, which serves as a primary benchmark for mortgages, auto loans, and credit card debt, rose by less than 1 basis point to 5.612%. The yield on 30-year U.S. Treasury notes, an instrument often sensitive to geopolitical developments, remained unchanged at 5.6150%. The yield on the 2-year Treasury note, which tracks short-term Federal Reserve rate decisions more closely, increased by less than 2 basis points to 4.774%. One basis point is equal to 0.01%.
These small increases followed a previous session in which Treasury yields declined after reaching their highest levels since 2002 earlier in the week. On Thursday, Trump adopted a diplomatic stance regarding the Middle East conflict, stating that no U.S. strikes against Iran would occur prior to the next month's election. This comment appeared amid a noticeable drop in public support for the ongoing war.
Energy markets reacted to the presidential remarks, with prices falling after rising sharply since the conflict began on Feb. 28. West Texas Intermediate futures dropped by about 1% to approximately $90 per barrel. Brent crude, the global price benchmark, decreased by more than 1% to around $102 per barrel.
Federal Reserve Governor Christopher Waller also weighed in on monetary policy, suggesting that additional interest rate hikes may be necessary to address persistent inflation. Inflation has remained above the Federal Reserve's 2% target for more than five years. Speaking at a Central Bank of Turkey forum in Istanbul, Waller noted that while hikes might be needed, they may not be required immediately.
The Treasury Department conducted two major bond auctions earlier in the week. On Thursday, it sold $22 billion in 30-year notes, with indirect bidders such as central banks purchasing more than 72% of the offering, a figure above the 10-auction average of 68%. The department had sold $39 billion in 10-year notes on Wednesday.