U.S. Treasury yields eased Monday morning as bond investors braced for the first major employment readings since the U.S.-Israeli strikes on Iran began and kept a nervous eye on escalating rhetoric from President Donald Trump.
The benchmark 10-year note yield dropped more than 6 basis points to 4.374 percent, the 30-year bond fell more than 5 basis points to 4.926 percent, and the 2-year yield declined more than 4 basis points to 3.869 percent. Bond prices rose as traders sought safety amid geopolitical uncertainty, even as oil prices remain elevated from disruptions in the Strait of Hormuz.
This week’s shortened trading calendar, markets close Friday for Good Friday, is packed with labor-market signals that will offer the first concrete look at how the conflict is rippling through the U.S. economy. Tuesday brings the Job Openings and Labor Turnover Survey (JOLTS) for February, followed by the ADP private-payroll estimate on Wednesday and the March nonfarm payrolls report on Thursday.
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Economists will be watching for any softening in hiring, especially in energy-sensitive sectors such as transportation, manufacturing, and retail.
“Looking at the week ahead, we should start to learn about the economic consequences of the conflict, as several data releases for March are out, which cover the period since the strikes began on February 28,” Deutsche Bank analysts wrote in a note to clients.
They expect the ISM manufacturing report on Wednesday to show early signs of higher input costs feeding into inflation pressures.
Trump kept the pressure on Tehran over the weekend and into Monday. In an interview with the Financial Times published Sunday, he floated the idea of the United States seizing Iran’s oil and its critical export terminal at Kharg Island, which handles about 90 percent of the country’s crude shipments.
“Maybe we take Kharg Island, maybe we don’t. We have a lot of options,” he said, adding that taking the oil would be his “favorite thing.”
On Monday, he said Washington was in “serious discussions with a new, and more reasonable, regime” to end military operations, but warned that if the Strait of Hormuz is not reopened immediately and a peace deal is not reached shortly, the U.S. would “completely” obliterate Iran’s energy infrastructure — oil wells, power plants and possibly Kharg Island itself.
The tough talk has kept oil markets on edge and complicated the Federal Reserve’s task. Traders have already priced out any rate cuts this year, fearing that higher energy costs will keep inflation sticky even as growth slows. The combination is the classic setup for stagflation worries that typically send investors into Treasuries.
The labor data will test whether those fears are already materializing. Goldman Sachs estimates the oil shock alone is shaving roughly 10,000 jobs a month, mostly in consumer-facing industries. A “low-hire, low-fire” labor market that was already cooling could freeze further if businesses delay hiring amid higher fuel and freight costs.
Overseas, the picture is equally mixed. Bank of China reported a 2.18 percent rise in 2025 net profit to 243.021 billion yuan ($35.16 billion), slightly beating the median analyst forecast. The result stood out against nearly flat profits at several other major Chinese lenders last week, underscoring the resilience of state-backed institutions even as the world’s second-largest economy wrestles with a stubborn property-sector debt crisis. The bank’s net interest margin held steady at 1.26 percent, while its non-performing loan ratio edged down slightly to 1.23 percent.
Still, the modest uptick at Bank of China does little to ease broader concerns about China’s slowdown, which adds another challenge for global investors already juggling Middle East risks.
Bond traders are essentially betting that any near-term inflationary push from oil will be outweighed by slower growth and tighter credit conditions. The yield curve remains inverted in places, signaling persistent caution about the economic outlook.