US Treasury auctions suffer worst week since May 2024 as Iran war unnerves bond markets

All three US Treasury auctions this week met weak demand, marking the poorest three-auction stretch since May 2024. The $69B 2-year, $70B 5-year, and 7-year note sales all cleared at yields above prevailing market levels as investors demanded extra compensation for heightened geopolitical risk. Oil-related inflation concerns are eclipsing the traditional flight-to-safety bid. Instead of yields falling as war risk rises, the 10-year yield climbed from 3.96% at the end of February to as high as 4.26% in the first week of fighting. Iran's parliament speaker further raised the stakes, warning that US Treasury bond buyers are "legitimate targets" alongside military bases. Pentagon officials told lawmakers the first six days of the Iran war cost more than $11.3B. President Trump has extended the pause on strikes against Iranian energy targets by 10 days, citing ongoing talks.