Treasury yields slide as Iran tensions ease — for now
The 2-year note, which tracks the Fed’s near-term policy path more closely, shed about 6 basis points to 4.231%, while the 30-year bond yield fell 6 basis points to 5.216%.
Oil prices have emerged as the dominant market force setting mortgage rates in 2026, outweighing the influence of the Federal Reserve’s own policy signals. Monday’s pullback reflected that dynamic in reverse.
Trump sparked the rally when he said the US would hold off on fresh strikes against Iran at the request of Gulf allies and that talks would restart. But the optimism was quickly tested. Iranian foreign ministry spokesperson Esmail Baghaei told reporters Monday that no direct negotiations with Washington were planned, reiterating that Tehran’s current engagement is limited to discussions with Oman over the Strait of Hormuz.
Bond market tests the Fed’s credibility
The Monday move followed a bruising week for long-dated US debt. The 30-year Treasury yield rose to its highest level since 2007 last week after the Federal Reserve’s most recent rate decision drew a notably hawkish read from investors.
The Federal Open Market Committee voted 9-3 to hold the federal funds rate steady between 3.5% and 3.75%, with three dissenting officials on record as supporting a rate increase to combat persistent inflation.
