US Treasuries Drop Amid Oil Volatility from Erratic Iran Developments

US Treasury yields rose sharply on Friday as conflicting intelligence briefings on Iran’s nuclear program sparked renewed volatility in energy markets. The 10-year note yield climbed to 4.82%, marking its highest level since early February, as investors pulled back from safe-haven assets amid rising risk aversion. The move followed a 5.3% jump in crude oil futures (CL=F) earlier in the session, driven by speculation that Iran may be accelerating enrichment activities, only to reverse course on later reports suggesting diplomatic engagement was underway. The VIX index, a key gauge of market fear, surged to 28.6—the highest since December 2024—reflecting heightened uncertainty across financial markets. The oil price swing, with Brent crude fluctuating between $87.40 and $92.10 per barrel, directly fed into bond market dynamics, as rising inflation expectations and geopolitical risk weighed on long-duration debt. The 30-year Treasury yield also rose 12 basis points to 5.09%, signaling a broader repricing of risk. Energy firms saw mixed performance, with ExxonMobil (XOM) up 1.8% on the oil rebound, while defense contractors like Raytheon Technologies (RTX) slipped 0.9% as investors reevaluated military spending scenarios. The Treasury sell-off was most pronounced in longer-dated maturities, with the 30-year bond falling 1.2% in price, translating to a 12-basis-point increase in yield. Market participants now anticipate tighter monetary policy persistence to combat inflation fueled by supply shocks. Investors are now closely monitoring Middle East developments, with the next wave of data expected from the International Atomic Energy Agency (IAEA) and US intelligence assessments due within the next 72 hours. The current volatility underscores how rapidly geopolitical tensions can reshape global capital flows.