Treasury yields held steady on Monday as investors awaited U.S. President Donald Trump's upcoming press conference on the Iran war and key inflation data due this week.
The yield on the 10-year Treasury added less than 1 basis point to 4.3525%. The 2-year Treasury also gained less than 1 basis point at 3.856%, while the 30-year Treasury yield rose 1 basis point to 4.918%.
One basis point is equal to 0.01%, with yields and prices moving inversely.
On Sunday, President Donald Trump issued an expletive-laden ultimatum, vowing to turn Iran into "Hell" if the Islamic Republic doesn't fully reopen the Strait of Hormuz by Tuesday, 8 p.m. ET. But hours later, in an interview with Fox News, Trump said he was hopeful that a deal could be reached with Tehran by Monday.
Meanwhile, Iran has rejected Trump's latest threats, saying that the critical waterway would only reopen fully after Tehran is compensated for the damage from the war, as it continued strikes across the Gulf over the weekend, including Kuwait's oil headquarters.
Reuters reported Monday that Iran and the U.S. have received a plan to end hostilities that, if agreed, would result in an immediate ceasefire and the reopening of the Strait of Hormuz. The framework, which could come into effect on Monday, was put together by Pakistan, an unnamed source told Reuters.
The Mideast war, now in its sixth week, has sent energy prices soaring and prompted fixed-income investors to reprice the deteriorating inflation outlook, trimming bets on interest rate cuts by the Federal Reserve this year.
The 10-year Treasury yield has gained around 36 basis points from 3.962% before the conflict started, hovering near the highest levels since mid-2025.
"Bonds have declined alongside equities, suggesting stagflation rather than a recession," said Oriano Lizza, a trader at CMC Markets Singapore, warning of heightened volatility in the lead-up to the Tuesday deadline.
A formalized deal could lower WTI oil prices by $20 to $30 and push the S&P 500 index higher by up to 5%, according to Lizza's estimates, while an infrastructure strike could raise crude prices to a range of $130 to $150 per barrel and send the Cboe Volatility Index beyond 35.
Low trading volumes during the holidays on Monday may intensify market moves, said Lizza, who advised investors to "wait until after Tuesday evening to take positions."
Investors will also closely watch a spate of key economic data out of the U.S. this week, including the February personal consumption expenditures index. The Fed's preferred inflation gauge, due Thursday, will offer an early read on whether the oil shock is feeding through to prices in the world's largest economy.
