Benchmark 10-year Treasury yield exceeds 4.75% as U.S., Iran exchange attacks

The 10-year U.S. Treasury yield rose to a new 52-week high on Monday, surpassing 4.75% as a military escalation in the Middle East sent shockwaves through global markets and added to inflation fears.

The yield previously tested above the 4.75% threshold in January 2025, climbing to 4.8% before eventually pulling back. Before that, the 10-year note hit a post-pandemic peak of roughly 5% in October 2023. It reached as high as 4.76% on Monday.

The sell-off in government debt comes as U.S. forces struck two Iranian rocket launchers on Larak Island near the Strait of Hormuz, marking the first known American attack inside Iran since late July. That, in turn, renewed concerns that escalating hostilities could disrupt critical energy shipments through the vital maritime corridor.

Potential disruptions to crude supplies threaten to stoke energy prices , directly exacerbating the persistent inflation concerns highlighted last week by Federal Reserve Chair Kevin Warsh. Indeed, crude oil futures jumped around 3% at press time.

Meanwhile, short-dated yields held roughly steady at elevated levels as a September rate hike came back into focus. Following Fed Chair Kevin Warsh's remarks at Jackson Hole on Friday, a hike is now the base case, pricing in at a 63.9% probability according to the CME FedWatch tool.

The policy-sensitive two-year tenor is changing hands just below the 4.35% mark that has acted as technical resistance a number of times over the last couple of years, according to TA Capital Research Founder Trent Carroll. So, a 4.4% breach could foreshadow another shift in Fed policy as rate hike expectations rise.