US Bonds Remain Under Pressure

The yield on the US 10-year Treasury note inched up 1 bps to 4.09% on Wednesday, marking a third consecutive session of gains, though it pared some of its early advance after a New York Times report indicated that Iranian operatives had offered to discuss terms for ending the conflict, while oil and gas prices showed signs of easing. The bond market has been under pressure as mounting concerns that the war with Iran and the resulting surge in energy prices could fuel an inflationary spiral. Investors fear that persistent price pressures may limit the Federal Reserve’s scope to cut borrowing costs. Traders have scaled back expectations for rate cuts, now pricing in the next reduction in September rather than July, although two 25-basis-point cuts are still anticipated before year-end. Meanwhile, the Treasury Secretary said the global 15% tariff starts this week, adding that he expects the levies to revert to their previous levels within 5 months.

The yield on the US 10-year Treasury note rose for a third straight session to 4.09% on Wednesday, as mounting concerns that the war with Iran and the resulting surge in energy prices could fuel an inflationary spiral continued to weigh on bonds. Investors fear that persistent price pressures may limit the Federal Reserve’s scope to cut borrowing costs. Traders have scaled back expectations for rate cuts, now pricing in the next reduction in September rather than July, although two 25-basis-point cuts are still anticipated before year-end. As the US-Israeli conflict with Iran entered its fifth day, the usual safe-haven demand for Treasuries failed to materialize, with inflation concerns outweighing the appeal of defensive assets.

The yield on the US 10-year Treasury note held around 4.06% on Wednesday after rising for two consecutive sessions, as concerns that a prolonged Middle East conflict could keep energy prices elevated fueled inflation fears. Traders scaled back expectations for Federal Reserve rate cuts, now pricing in the next reduction in September instead of July, though two 25 basis point cuts are still anticipated this year. The US-Israeli war on Iran entered its fifth day, with Israel striking a building where clerics were meeting to elect a new Supreme Leader on Tuesday. President Donald Trump voiced concern that the attacks could bring a new Iranian leadership as troubling as the previous regime, underscoring the conflict’s uncertain outcome. Notably, the typical safe-haven demand for bonds failed to emerge, as inflation worries outweighed appetite for defensive assets.