Treasury Yields Swing After Jobs Report

The yield on the US 10-year Treasury note edged down to 4.31% on Thursday after rising to as high as 4.38% early in the session, as a report that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz offered some relief. However, volatility is expected to persist amid escalating rhetoric from President Trump and as crude prices remain near 2022 highs.Oil prices surged following Trump’s pledge to take more aggressive action against Iran. High energy prices are fuelling worries about an inflation spiral which could prompt the Fed to adopt a more hawkish stance. Earlier this week, Fed Chair Powell said officials may need to respond to the economic effects of the conflict, though not at this stage, adding that current policy is well positioned to allow a wait-and-see approach. Markets currently expect the Fed to keep the federal funds rate unchanged this year.

The yield on the US 10-year Treasury note edged up to 4.36% on Thursday, as concerns about a renewed inflation spiral resurfaced. Oil prices surged following US President Trump’s pledge to take more aggressive action against Iran, while offering no concrete plans to reopen the Strait of Hormuz. Crude prices remain near 2022 highs, fuelling worries about their inflationary impact, which could prompt the Fed to adopt a more hawkish stance and delay any rate cuts this year. Earlier this week, Fed Chair Powell said officials may need to respond to the economic effects of the conflict, though not at this stage, adding that current policy is well positioned to allow a wait-and-see approach. Markets currently expect the Fed to keep the federal funds rate unchanged this year.

The yield on the US 10-year Treasury note rose to 4.37% on Thursday as hopes for a quick end to the Middle East war faded, fueling concerns of a prolonged energy crisis that could drive inflation higher. President Donald Trump told the nation in a prime-time speech that the conflict may be nearing an end but warned that the US would continue military action against Iran over the next two to three weeks. Iran on Wednesday also denied Trump’s claim that it had requested a ceasefire. Meanwhile, latest data showed that March ADP private payrolls exceeded forecasts, and February retail sales posted stronger-than-expected gains, underscoring the resilience of the US economy. Markets are now pricing in zero rate cuts from the Federal Reserve for the rest of the year, even though Fed’s own projections still show one reduction.