Treasuries: Iran Crisis Drives Flight to Safety
The 10-year Treasury yield has fallen to 4.02%, extending a two-week decline of 16 basis points from 4.18% as investors pile into government bonds amid escalating geopolitical risk. The U.S.-Israeli military strikes on Iran, including the reported killing of Supreme Leader Khamenei, have triggered the most significant flight-to-safety bid in the bond market since the tariff turmoil of early February. Across the yield curve, the rally is broad-based. The 2-year yield has dropped to 3.42% from 3.52%, while the 30-year bond yield has fallen to 4.67% from 4.82% — a 15 basis point decline that underscores the strength of safe-haven demand. With ships attacked near the Strait of Hormuz and flights cancelled across the Gulf region, the bond market is pricing in sustained geopolitical uncertainty. The safe-haven move comes against a backdrop of continued Federal Reserve easing. The fed funds rate has declined to 3.64% from 4.33% over the past six months, and the combination of monetary accommodation and geopolitical risk is creating a powerful tailwind for Treasury prices.