US 10Y Yield Edges Higher

The yield on the US 10-year Treasury note rose to around 4.11% on Thursday, marking a fourth consecutive session of gains as investors monitored developments in the US-Iran conflict following the sinking of an Iranian warship by a US submarine off the coast of Sri Lanka. The broader US-Israeli campaign against Iran has now entered its sixth day, keeping markets cautious about further escalation and the risk of a prolonged conflict that could weigh on growth and drive inflation higher. Meanwhile, a report from the New York Times indicated that Iranian operatives had offered to discuss terms for ending the conflict, though Tehran later denied the report. Elsewhere, Treasury Secretary Scott Bessent said President Donald Trump’s recently announced 15% global tariff is expected to take effect later this week. On the economic front, US services activity rose to a more than 3½-year high in February, while private-sector employment growth exceeded expectations.

The yield on the US 10-year Treasury note inched up 2bps to 4.09% on Wednesday, extending its third consecutive session of gains as traders weighed developments in the conflict with Iran, tariff news and economic data. A New York Times report indicated that Iranian operatives had offered to discuss terms for ending the conflict. As a result, oil and gas prices eased. 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. Traders have scaled back expectations for rate cuts, now pricing in the next reduction in September rather than July, although two 25bps 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. On the data front, the ISM Services PMI showed the services sector unexpectedly expanded at the fastest pace since mid-2022

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.