A trader works on the floor of the New York Stock Exchange (NYSE) at the opening bell on March 5, 2026 in New York City.
Angela Weiss | Afp | Getty Images
Treasury yields held steady on Tuesday following a softer-than-expected producer price index reading and as oil prices slid amid the latest developments in the Middle East.
The yield on the 10-year U.S. Treasury note — the benchmark for government borrowing — dropped by less than 1 basis point to 4.293%.
The 2-year Treasury note yield, which is more sensitive to short-term Federal Reserve interest rate decisions, was less than 1 basis point lower at 3.774%. The longer-dated 30-year Treasury bond yield was also down by less than 1 basis point at 4.898%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
On Tuesday, the Bureau of Labor Statistics reported that the producer price index rose 0.5% last month, well below the 1.1% that economists polled by Dow Jones were expecting.
When excluding volatile food and energy prices, core PPI climbed only 0.1%, also below the consensus estimate of a 0.5% increase.
The latest data points come as investors continue to gauge the lasting impact of the Iran war on inflation and the direction for interest rate policy at the Fed.
“Net, net, producers are still reporting above-normal price increases which will put upward pressure on inflation the consumer is already seeing,” said Chris Rupkey, FWDBONDS’ chief economist. “The only good thing is that producer price inflation was perhaps not as bad as feared given March is the first full month since the Iran war began.”
“More inflation is on the way to consumers based on today’s producer price report, it is just a matter of time,” he added.
Energy prices fell on Tuesday. West Texas Intermediate crude futures were last seen trading above $95 per barrel after declining 3% as investors weighed the impact of the U.S.’ blockade on the Strait of Hormuz aimed at forcing Iran to reopen the vital shipping lane.
Treasury yields edged lower on Monday amid renewed optimism over a potential lasting resolution to the conflict following last week’s uneasy ceasefire agreement.