Treasury yields rise as Trump reiterates Iran infrastructure threat, sending oil higher

Treasury yields rose on Tuesday as President Donald Trump again warned the U.S. would strike Iranian civilian and energy infrastructure if Tehran did not agree to reopen the Strait of Hormuz before a looming deadline.

The 10-year Treasury yield — the benchmark for U.S. government borrowing — was more than 2 basis points higher at 4.364%.

The yield on the 2-year Treasury note, which is more sensitive to short-term Federal Reserve rate decisions, was up by more than 1 basis point at 3.862%. The 30-year bond yield, meanwhile, rose more than 4 basis points, reaching 4.933%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

Eyes were on Trump's deadline of 8 p.m. ET Tuesday for Tehran to reopen the Strait of Hormuz. If that is not fulfilled, Trump has threatened to bomb Iranian infrastructure, including power plants and bridges — a sentiment he repeated on Monday. The president has also said it was "highly unlikely" he would extend the deadline further.

On Tuesday morning, Trump said on Truth Social that "a whole civilization will die tonight, never to be brought back again," before adding, "maybe something revolutionarily wonderful can happen, WHO KNOWS? We will find out tonight, one of the most important moments in the long and complex history of the World."

Energy prices have notched higher as Tuesday's deadline approached. Brent crude futures, the global benchmark, rose 0.3%, trading above $110 a barrel. U.S. West Texas Intermediate futures were last seen 3% higher at above $115 a barrel.

"Markets and investors do not appear to have fully priced in, or fully considered the repercussions of such a scenario," Kambiz Kazemi, CIO of Validus Risk Management, said about the deadline's possible fallout. "As a result, unprepared portfolios and positioning could lead to an abrupt repricing across a wide range of risk assets."

Iranian officials have rejected plans for a temporary ceasefire and have instead called for a permanent end to the conflict.

Meanwhile, the Commerce Department reported Tuesday that durable goods orders fell 1.4% in February, more than the 0.5% decline seen in the prior month and below the 1.1% decline that economists polled by Dow Jones had estimated.