Treasury yields rise after Iran reportedly stops communication with U.S.

Treasury yields rose on Monday as tensions ramped up between the U.S. and Iran, further clouding the prospects for a deal to end the conflict.

The 10-year Treasury yield— the key benchmark for mortgages, auto loans and credit card debt — was up more than 5 basis points at 4.504%.

The yield on the 2-year Treasury note, which often move in reaction to short-term Federal Reserve rate decisions, was more than 6 basis points higher at 4.076%.

The 30-year bond yield, meanwhile, rose more than 2 basis points to 5.017%.

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

Borrowing costs gained after Iran’s Tasnim news agency reported that Iranian negotiators are stopping talks with the U.S. following Israeli attacks in Lebanon. The report also said that Iran will completely close the Strait of Hormuz.

The U.S. and Iran also exchanged air strikes over the weekend. The U.S. successfully intercepted two Iranian ballistic missiles overnight that were targeting American forces based in Kuwait, according to U.S. Central Command.

Bond yields had steadied on Friday as traders closed out the month with an eye on geopolitical developments, amid signs that the U.S. and Iran were nearing a ceasefire extension.

But fresh uncertainty over the direction of the conflict pushed oil prices higher on the first day of June. Prices of West Texas Intermediate futures jumped 7% to around $93 per barrel, while Brent crude, the international oil price benchmark, was up 6% at around $96 per barrel.

Elsewhere, former Federal Reserve chair Jerome Powell warned in a speech that moves by the Trump administration to push the central bank towards lower interest rates risk damaging the public’s faith in the institution’s independence.