Treasury yields steady as investors monitor inflation data, U.S. strikes in Iran
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- Treasury yields were unmoved in early Thursday trade, with the 10-year at 4.5384%, the 2-year at 4.1288%, and the 30-year at 5.0200% — a curve that typically reacts sharply to geopolitical events but held steady after U.S. strikes on Iran.
- May's CPI rose 0.5% month-on-month and 4.2% year-over-year, up from April's 3.8% annual print and in line with market expectations, marking the fastest annual pace since 2023.
- President Trump told reporters 'I love the inflation' when asked about the annual spike, and separately said in the Oval Office that prices are 'going to come down like a rock' once the U.S.-Iran war is resolved.
- Traders are now watching the May producer price index, due later Thursday from the Bureau of Labor Statistics, with consensus estimates projecting a 0.7% monthly jump.
- Oil prices reversed course after initially rising on Middle East developments, with WTI last seen down 0.9% at $89.24 and global benchmark Brent crude slipping more than 1% to $92.14.
- U.S. missiles struck multiple targets in Iran overnight, prompting Kuwait to temporarily close its airspace over what it called 'Iranian aggressions,' while Israel alerted several northern communities amid projectile strikes from Lebanon.
Why it matters: The 30-year yield at 5.02% is historically the curve's geopolitical bellwether, yet it didn't budge despite U.S. strikes on Iran — suggesting bond markets read the 4.2% CPI as the dominant signal over the conflict. With consensus expecting a 0.7% monthly PPI print later Thursday, traders face a two-front risk: persistent inflation that could keep the Fed hawkish while a Middle East escalation threatens another oil-driven price shock.
