Treasury Yields Hold Steady Amid Geopolitical Tension and In-Line PCE Data

U.S. Treasury markets exhibited a lack of clear direction on Thursday, with bond prices fluctuating around the unchanged line before closing flat. The benchmark ten-year note yield ended the day at 4.293%, having traded in a range between 4.260% and 4.321%. The choppy trading environment was driven by heightened geopolitical instability in the Middle East. Crude oil prices surged above $100 per barrel following claims by Iran's deputy foreign minister, Saeed Khatibzadeh, that the Strait of Hormuz had been closed. This followed accusations that the U.S. and Israel violated existing ceasefire agreements. Despite the initial spike, May crude oil prices retraced some gains to settle at $97.93 per barrel, an increase of $3.52 or 3.7%. The volatility eased slightly after Israeli Prime Minister Benjamin Netanyahu expressed a willingness to begin negotiations with Lebanon to disarm Hezbollah and establish peaceful relations. On the economic front, the Commerce Department reported that the Personal Consumption Expenditures (PCE) price index rose 0.4% in February, matching economist forecasts. The annual growth rate remained steady at 2.8%. Core PCE, which excludes food and energy, also rose 0.4% in February. The annual core rate saw a slight decline to 3.0% from 3.1% in January, a move that aligned with market expectations and provided a neutral backdrop for fixed-income traders.