Yields rise as Hormuz deal stalls. Treasury yields climbed today as oil prices rose, with a deal to reopen the Strait of Hormuz still not announced despite positive signals from US and Iranian officials last week. The 2-year yield closed 5 bps higher at 4.24%, while the 10-year yield closed 6 bps higher at 4.71%. Brent crude rose over 5% to trade around $88 per barrel. Meanwhile, equites inched lower on the peace deal standoff, with the S&P 500 and NASDAQ closing 0.06% and 0.32% lower, respectively.
Trump ramps up demands as Iran requests reparations. President Trump countered Tehran’s request for reparations as a condition to end the conflict, posting on social media that he is “likewise demanding compensation from Iran, for all the people that they have killed and gravely wounded,” and adding that these stipulations would be put “firmly into any, and all, future negotiations.” The exchange cast further doubt on the likelihood of an imminent Hormuz reopening. Oil prices climbed further as refineries in Russia, Libya, and Saudi Arabia were also struck, pushing diesel prices higher alongside crude.
Hammack reaffirms hawkish stance following weak payrolls report. Cleveland Fed President Beth Hammack, one of three dissenters at July’s FOMC meeting who voted in favor of a quarter point hike, reiterated her hawkish stance today despite Friday’s weak payrolls report. Hammack says she is “still not seeing a problem” and that inflation remains her primary concern. Hammack declared that “one 25 basis point move probably doesn’t do a whole lot for the economy,” suggesting multiple hikes may be needed. She added that businesses are not feeling pressure from current policy rate levels, stating “I’m not hearing that they’re sensing any restraint from investments in growth based on where interest rates are.”
