Treasury yields rose on Thursday as investors weighed the latest developments in the U.S.-Iran war and the inflationary risk posed by rising oil prices.
The benchmark 10-year Treasury yield was higher by more than 5 basis points at 4.261%. The 30-year Treasury bond yield added more than 2 basis points to 4.879%. The 2-year Treasury note yield was higher by more than 9 basis points, reaching 3.734%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Oil prices rose again on Thursday after settling up more than 4% Wednesday. Iran's new Supreme Leader Mojtaba Khamenei has said that the closure of the Strait of Hormuz should continue as a "tool to pressure the enemy." West Texas Intermediate futures climbed 9.72% to settle at $95.73 a barrel. Brent crude gained 9.22% to settle at $100.46 a barrel.
The rise in oil prices in the prior trading day came despite the International Energy Agency agreeing to release 400 million barrels of oil — the largest release in the organization's history. The move higher signaled that investors anticipate the war may persist longer than anticipated.
The U.S.-Israel campaign against Iran began on Feb. 28, the last day of the month.
Thursday's moves also follow a sticky February inflation report released on Wednesday. The consumer price index increased a seasonally adjusted 0.3% for the month, putting the 12-month inflation rate at 2.4%, according to Bureau of Labor Statistics data released Wednesday. Both numbers matched the Dow Jones consensus forecast, and remained above the Federal Reserve's inflation target of 2% to reach price stability.
Investors are awaiting the latest reading of the personal consumption expenditures index — the Fed's preferred gauge of inflation — which is scheduled for release on Friday.
"CPI printed in-line with consensus expectations for February, a ho-hum release that reflects the period before the escalation of military action in the Middle East that will lift inflation readings next month due to higher energy prices," said Josh Jamner, senior investment strategy analyst at ClearBridge Investments.
In addition to inflation, investors weighed the latest data on the state of the labor market. Initial jobless claims for the week ended March 7 stood at 213,000, the Labor Department reported Thursday. That marked a decrease of 1,000 from the previous weekly period and just below the Dow Jones forecast for 215,000.