U.S. Treasury bonds moved higher on Thursday as investors bought bonds following this week’s price decline. However, gains were limited as markets remained cautious over renewed military tensions between the United States and Iran.
The benchmark 10-year Treasury yield fell 1.6 basis points to 4.551% in late morning trading. On Wednesday, the yield had climbed to its highest level in seven weeks.
Treasury Yields Ease From Recent Highs
The 30-year Treasury yield held steady at 5.065% after also reaching a seven-week high in the previous session.
Meanwhile, the 2-year Treasury yield dropped 2 basis points to 4.18%. This yield is closely watched because it reflects market expectations for Federal Reserve interest rate policy.
Earlier in the week, the 2-year yield had touched its highest level in two weeks.
Iran Conflict Keeps Markets Cautious
Investor focus shifted back to the Iran conflict after Iranian armed forces launched attacks on U.S. military infrastructure in Gulf states on Thursday.
The strikes came after U.S. military operations targeted Iran’s southern coastal and eastern provinces. The escalation added pressure to a ceasefire agreement that had been in place for around three weeks.
Oil Prices Fall Despite Geopolitical Tensions
U.S. crude oil futures declined 1.7% to $72.33 per barrel.
The move suggested that energy markets were also trying to assess the latest geopolitical risks while balancing supply and demand expectations.
Jobless Claims Support Fed Rate Expectations
Weekly jobless claims data also influenced market sentiment.
The figures supported expectations that the Federal Reserve may keep interest rates unchanged for several upcoming meetings. The labor market appears to be stabilizing after a sharp slowdown in job growth in June.
For now, Treasury demand has improved after the recent selloff. Still, geopolitical risks and Fed policy expectations continue to shape moves across the bond market.
