U.S. two-year Treasury yield fell 10 bps on the day to 4.18%.

CITIC Securities says renewed U.S.-Iran tensions reflect fundamental flaws in the U.S.-Iran memorandum of understanding that make implementation difficult. The current stalemate carries a risk of becoming prolonged, characterized by failure to form a stable agreement, episodic fighting and intermittent disruptions to transit through the Strait of Hormuz. Markets typically expect this year’s U.S. midterm elections to restrain the Trump administration’s use of force, but CITIC notes that if the probability of Republicans losing the Senate remains low, political pressure on issues such as Supreme Court appointments, impeachment probes and election disputes will be limited — so markets may be overestimating the midterms’ constraining effect.

U.S. Commerce Department export-control chief Jeffrey Kessler told a congressional hearing Tuesday that new chip and AI regulatory measures are imminent. He said the Trump administration does not intend to replace the Biden-era AI chip export restrictions.