U.S. Treasury Bond Prices Fall as Oil Surges

U.S. Treasury bond prices declined on Tuesday, pushing the benchmark ten-year note yield up 5.0 basis points to 4.529 percent. This downturn followed a surge of more than 5 percent in crude oil futures after projectile attacks targeted vessels in the Strait of Hormuz. The attacks raised investor concerns over inflation and a potential escalation of conflict between the United States and Iran.

Market pressure increased further after the United States Department of the Treasury auctioned $58 billion in three-year notes, which experienced below-average demand with a bid-to-cover ratio of 2.60. Economic data added to the volatility, as the United States Department of Commerce reported that the national trade deficit expanded to $77.6 billion in May from a revised $54.6 billion in April. This widening deficit was driven by a 3.3 percent increase in imports alongside a 3.2 percent decrease in exports.