Treasury yields were broadly flat on Monday after the ceasefire agreement between the U.S. and Iran came under increasing strain over the weekend, as the two sides traded strikes.
The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — was broadly unchanged at 4.473%.
The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, rose over 1 basis point to 4.223%. The longer-dated 30-year Treasury bond yield was flat at 5.071%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
An Iranian strike on a commercial shipping vessel over the weekend led to a fresh wave of strikes from U.S. forces. Iran responded by launching an attack on American military bases in several Gulf states, deepening a standoff over the strategically vital Strait of Hormuz.
The latest exchange casts further doubt on the future of the interim peace agreement signed last month, which sought to pave the way for permanently reopening the Strait of Hormuz and ending the war after 60 days of negotiations.
Iran's strikes targeted U.S. bases in Kuwait, Bahrain, Jordan, Oman and Qatar, according to the country's state media outlets, which described them as retaliatory measures to renewed U.S. bombings.
Crude prices were up in early trading. Brent futures rose 2.8% to $78.11 per barrel, while West Texas Intermediate futures advanced more than 2.5% to $73.25.
The economic calendar this week is packed with a raft of data releases that could influence the trajectory of bond markets.
Core inflation readings are due on Tuesday, while Kevin Warsh makes his first appearance before Congress as Fed chair later that afternoon.
Consumer sentiment for July is due on Friday, which will lend some fresh insight into the strength of household finances.
"The real question is whether these reports will validate the strong spending narrative, or if mounting geopolitical risks and elevated interest rates have had a more significant impact on the consumer over the last few months," Alex Guiliano, chief investment officer at Resonate Wealth Partners said.
— CNBC's Sam Meredith also contributed to this report.
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