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* Barclays pushes rate cut view back to 2027
* US factory orders rose 1.5% in March, surpassing forecasts
* Iran attacks on UAE escalate, pushing oil prices and inflation fears higher (Updates to afternoon New York trading)
NEW YORK, May 4 (Reuters) - U.S. Treasury yields jumped on Monday with the benchmark 10-year yield on track for its biggest daily rise in nearly six weeks, after Iran attacks on the United Arab Emirates and in the Strait of Hormuzlifted crude prices and fanned concerns about inflation. Oil prices shot higher after Iran hit several ships in the Strait of Hormuz and set a UAE oil port ablaze, as President Donald Trump's attempt to use the U.S. Navy to free up shipping provoked the war's biggest escalation since a ceasefire was declared four weeks ago. U.S. crude rose 4.5% to $106.53 a barrel and Brent rose to $114.54 per barrel, up 5.88% on the day.
"In the interest rate market, we have rising inflation expectations ... and so that's driving some modest upward pressure on 10-year Treasury yields, but at the same time, yields remain range-bound," said Bill Merz, head of capital markets research at U.S. Bank Wealth Management in Minneapolis.
"The yield moves that we've seen, sure, there has been certainly day-to-day volatility, but within that broader context of range-bound yields, low spreads, and strength in equity market fundamentals."
The yield on the benchmark U.S. 10-year Treasury note rose 7 basis points to 4.448% and was on track for its biggest daily rise since March 26.
Since the U.S.-Israeli war with Iran began at the end of February, yields have steadily climbed as worries about higher prices have dented market expectations for rate cuts from the Federal Reserve this year. New York Federal Reserve President John Williams said on Monday that the Fed's monetary policy is "well-positioned" to deal with the high level of economic uncertainty facing the economy as a result of the war in the Middle East.
The yield on the 30-year bond was up 5.9 basis points at 5.025% after reaching 5.036%, its highest since July 17. Barclays joined a growing list of brokerages expecting no rate cuts from the Fed this year, citing prolonged high energy prices linked to the Iran war that could keep inflation elevated. It had previously forecast one 25-basis-point cut in September.
Several firms have scaled back expectations for easing since the start of the year, when markets were pricing in about 50 basis points of cuts. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, surged 8.1 basis points to 3.969%.
Markets will have a flurry of labor market data this week, culminating in the government's jobs report on Friday. Economists polled by Reuters forecast a 62,000 rise in nonfarm payrolls. Data on Monday showed new orders for U.S. factory goods rose 1.5% in March, according to the Commerce Department, the biggest gain since November and well above forecasts for a 0.5% increase.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.805%, its highest since August 2022, after closing at 2.702% on Friday.
The 10-year TIPS breakeven rate was last at 2.519%, indicating the market sees inflation averaging about 2.5% a year for the next decade.
(Reporting by Chuck Mikolajczak; Editing by Mark Potter and Edmund Klamann)
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