US 10-Year Yield Rises Further

The yield on the US 10-year Treasury note rose to around 4.42% on Tuesday, reaching a one-week high as President Donald Trump cast doubt on the durability of the US-Iran ceasefire after rejecting Tehran’s latest peace proposal, keeping inflation risks elevated. Reports also suggested that President Trump is set to meet with his national security team to evaluate a potential resumption of military operations, alongside renewed consideration of plans to escort commercial vessels through the Strait of Hormuz. The ongoing conflict has kept oil prices elevated, reinforcing inflationary pressures and supporting expectations that interest rates may need to remain higher for longer to contain price growth. Meanwhile, investors were awaiting April’s consumer inflation report for further insight into how the Iran conflict is impacting the economy and shaping the Federal Reserve’s policy path. The Fed is widely expected to keep the federal funds rate unchanged through the remainder of the year.

The yield on the US 10-year Treasury note climbed around 5bps to 4.4% on Monday, as renewed tensions in US-Iran negotiations pushed oil prices higher and reignited inflation concerns. Sentiment deteriorated after President Trump rejected Iran’s response to his proposal, warning that the ceasefire was on “life support,” further fuelling fears of prolonged geopolitical instability in the Middle East. Meanwhile, US inflation data due tomorrow will be closely watched for further clues on the Fed’s next policy steps. The Fed is widely expected to keep the federal funds rate unchanged this year, while investors currently see a 31% chance of a rate hike in March. Investors were also looking ahead to a summit between US President Trump and Chinese President Xi Jinping expected later this week. According to US officials, the two leaders are set to discuss Iran, Taiwan, artificial intelligence, nuclear weapons, and critical minerals.

The yield on the US 10-year Treasury note climbed to around 4.39% on Monday, reversing the previous session’s decline as ongoing US-Iran tensions kept inflation risks in focus. President Donald Trump rejected Iran’s response to his peace proposal as “TOTALLY UNACCEPTABLE,” with negotiations stalled over how to end the 10-week conflict. Reports indicated that Tehran had offered to transfer part of its highly enriched uranium stockpile to a third country, while refusing to dismantle its nuclear facilities. On the economic front, data released Friday showed US nonfarm payrolls increased by 115,000 in April, well above expectations for a 62,000 gain, reinforcing expectations that the Federal Reserve will keep interest rates unchanged this year. Investors are now awaiting April US inflation data for further clues on how higher oil prices are feeding through to broader price pressures in the economy.