U.S. government debt yields ticked higher Tuesday as investors digested the first of three major Treasury auctions this week and an announcement by President Donald Trump on U.S. commitment to the Iran nuclear deal.
The yield on the benchmark 10-year Treasury note was higher at around 2.967 percent at 2:39 p.m. ET, while the yield on the 30-year Treasury bond was higher at 3.121 percent. Bond yields move inversely to prices.
Trump announced he was withdrawing the U.S. from the Iran nuclear deal, which lifted sanctions on the Middle Eastern nation, in return for the country to pull back on its nuclear ambitions. The president had often threatened to pull the U.S. from the Iran deal in the past, calling it "the worst deal ever."
In spite of the U.S. incumbent's threats to withdraw, President Hassan Rouhani stated that Iran had a plan to counter any move made by Trump when it comes to the deal, Reuters reported. Though Trump is widely expected to withdraw, Rouhani said on Tuesday that Iran would continue to seek "constructive relations with the world," despite potential sanctions.
An uncompromising exit by the Trump administration could also affect oil prices given Iran role as a leading crude exporter, and that could spell uncertainty for Treasurys.
"The higher price of oil will strain the commercial accounts of large oil importers in the emerging markets while helping producers," said Thierry Wizman, global interest rates and currencies strategist at Macquarie Group. "It will spur inflation almost everywhere, and thus perhaps lift inflation breakevens. In the U.S., that could be the catalyst for 10-year yields getting to 3.25 percent."