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2026-02-19 20:22:07
[US Treasury Yields Rise Against the Trend, Geopolitical Tensions Fails to Alleviate Supply Concerns] ⑴ On Thursday, despite escalating geopolitical tensions and Iran's preparations for a potential US attack, US Treasury yields rose across the board. As of press time, the 2-year yield was 3.47%, the 10-year yield was 4.096%, and the 2s-10s spread remained at 62.4 basis points. Market focus shifted from safe-haven demand to supply pressures and expectations for Federal Reserve policy. ⑵ In overnight headlines, Timothy Rausch of the Wall Street Journal noted that the minutes of the Fed's January meeting showed policymakers were "not very interested" in cutting interest rates, with some officials favoring more neutral language to counter expectations of rate cuts. Meanwhile, the Congressional Budget Office predicted that the US federal debt-to-GDP ratio would surpass 100% this year. ⑶ The situation in the Middle East continues to escalate. The WSJ reported that the US has amassed its strongest air force in the Gulf since the 2003 Iraq War, preparing to take action against Iran, but Trump has not yet decided whether to order a strike. The Financial Times pointed out that oil prices have already factored in the Iranian risk premium, but this assumes no supply disruptions. (4) Today's data is plentiful: Initial jobless claims, December trade balance, Philadelphia Fed Manufacturing Index, and pending home sales will be released. Federal Reserve officials Bostic, Bowman, and Kashkari will each deliver speeches. The Treasury will also auction 30-year TIPS and announce the issuance sizes of 2/5/7-year Treasury bonds next week.
