10-year Treasury yields rise to highest level since July 2025

Yields on 10-year Treasury bonds rose to their highest levels since July 2025 on Monday morning after a drastic repricing of Fed rate cut expectations last week.

The benchmark 10-year Treasury yield was up by more than 4 basis points at 4.435%, its highest in seven months. The 30-year Treasury bond yield was up just under 1 basis point to 4.966%. The 2-year Treasury note yield was higher by more than 10 basis points, reaching 3.997%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

"Typically in times of heightened geopolitical risk you'd expect U.S. Treasurys to benefit from safe haven demand, but amid the general market rally over the past couple of years, the main mover for yields has been Fed rate expectations," said Bradley Saunders, North America economist at Capital Economics.

"Investors have focused more on what the Iran war means for oil prices and the Fed's scope to continue cutting, and that's reflected in how the 10-year has risen since the war began."

The S&P Global Flash U.S. PMI report is due Tuesday morning, which measures the economic health of American manufacturing and services sectors.

"Clearly, Iran is not backing down," wrote Ben Emons, CIO and founder of Fed Watch Advisors. "The risk-off sentiment could worsen substantially this week, with the first visible macro effects in a deluge of global PMI data. … Portfolio de-risking could continue, making cash a viable asset again."

February's PMI report indicated a slowdown of business growth for services firms and employment expansion, and economists expect further softening. A reading above 50 tends to indicate growth, and forecasts predict the latest report to come in at 50.5, down from 51.9 in February.

The moves in Treasury yields followed the intensification of the Iran war over the weekend.

U.S. President Donald Trump said Saturday that he would "obliterate" Iran's power plants if Tehran failed to fully reopen the Strait within 48 hours.

Iran responded by escalating threats to target energy infrastructure and desalination facilities in the Gulf. Iranian Parliament speaker Mohammad Bagher Ghalibaf also said Saturday that entities that purchase American government bonds and "finance the U.S. military budget" would be considered legitimate targets, alongside military bases.

— CNBC's Holly Ellyatt and Fred Imbert also contributed to this report.