Yields edge higher on renewed geopolitical concerns. Treasury yields rose today as optimism for a US-Iran deal to reopen the Strait of Hormuz dimmed, with President Trump also threatening to attack Oman if it “gets in the way.” Oil prices subsequently climbed, with Brent crude up almost 3% at $91 per barrel, once again raising energy-driven inflation concerns. The 2-year yield closed 1bp higher at 4.18%, while the 10-year yield closed 3 bps higher at 4.72%. Meanwhile, equities fell on these worries, with the S&P 500 and NASDAQ closing 0.52% and 0.32% lower, respectively.
US unlikely to extend ceasefire agreement with Iran. The 60-day memorandum of understanding signed in June between the US and Iran is set to expire on Monday. The temporary agreement was originally intended to give both nations time to reach a lasting deal, though negotiations have fallen apart over the past few weeks as fighting has resumed and the Strait of Hormuz closed again. President Trump told reporters he does not plan to extend the truce, as talks between Washington and Tehran remain at a standstill. Iran has engaged in separate conversations with Oman on control over the strait, without US involvement. Meanwhile, President Trump threatened to launch attacks on Oman if it interferes with US efforts to reopen Hormuz.
New York Manufacturing reaches highest level since 2021. The Empire State Manufacturing Survey was released today, coming in at 20.6, five points higher than July’s reading and beating expectations of 10.0. This is the first time the index has exceeded 20 since December 2021. Bank of America economist Aditya Bhave attributed the strength to AI investment, noting that “AI capex is and should continue to be a tailwind for growth.” The six-month employment index also reached a four-year high, climbing to 28.2. Delivery times, supply availability, and unfilled orders all worsened, pointing to supply chain strain amid rising demand.
