Yields spike amid boiling tensions in the Middle East. Treasury yields climbed as many as 11 bps at the front end of the curve today as renewed attacks in the Middle East drove energy prices higher. Yields closed 6-8 bps higher across the curve, with the 2-year yield at 3.95% and the 10-year yield at 4.44%. Brent crude rose over 5% to ~$114 per barrel while WTI is near $106 per barrel. Meanwhile, equities tumbled from Friday’s record high levels, with the S&P 500 and NASDAQ closing 0.41% and 0.19% lower, respectively.
Ceasefire at risk as US-Iran exchange attacks. Iran launched attacks on the US military today as the US Navy attempted to guide two vessels marked with American flags through the Strait of Hormuz. In a Truth Social post, President Donald Trump said, “We’ve shot down seven small Boats or, as they like to call them, ‘fast’ boats.” Iran also fired missiles at the United Arab Emirates, its first attack on the UAE in nearly a month. The UAE intercepted several cruise missiles but said a drone strike resulted in a large fire at its Fujairah port, hospitalizing three people, while an oil tanker owned by the UAE’s state oil company was also struck by Iranian drones. Today’s events mark a renewed escalation since the ceasefire between the US and Iran took effect on April 8th and raises concerns on the path ahead, with some, such as Republican Senator Lindsay Graham, saying that today’s actions “more than justifies a big, strong, and short response to inflict further damage on Iran’s war machine.”
Hyperscaler capex fuels durable goods orders growth. Durable goods orders rebounded in March, increasing 0.8% after a 1.2% decline in February. The gain was driven by soaring AI investment from tech giants, with the four leading hyperscalers (Amazon, Microsoft, Alphabet, and Meta) now expected to exceed $670B in 2026 capex. Machinery and electrical equipment orders surged while transportation equipment rose for the first time in four months. Meanwhile, US factory orders rose 1.5% in March, well above estimates of a 0.6% increase and February’s revised 0.3% gain. Excluding transportation, factory orders increased 1.6%, flat against the prior month but above expectations of a 1.3% rise and marking the fifth straight MoM increase. Orders for ships and boats surged, rising 30.9% MoM, while orders for defense aircraft and parts jumped 17.8%.
