Middle East Conflict Drives U.S. Treasury Sell-Off Amid Rising Oil Prices

Oil prices continue to surge as the Middle East conflict shows no signs of abating. According to Jin10, investors are maintaining last week's trend of selling U.S. Treasuries. Barclays rate strategists Anshul Pradhan and Demi Hu noted in a report that U.S. Treasuries failed to act as a safe haven last week due to the conflict's impact being more inflationary and contributing to a broader budget deficit, rather than slowing U.S. economic growth. The strategists highlighted that this situation is forcing the market to reprice policy rate paths and fiscal risk premiums. "With weak economic data taking a backseat, the duration of the conflict becomes key," they stated. Tradeweb data shows that the yield on two-year U.S. Treasuries rose by 5.9 basis points to 3.611% during the day, while the yield on ten-year Treasuries increased by 5.7 basis points to 4.187%.