US 10Y Yield Falls for Second Session

The yield on the US 10-year Treasury note fell to around 4.32% on Tuesday, sliding for a second consecutive session amid dovish signals from Federal Reserve Chair Jerome Powell. He said long-term US inflation expectations appear in check despite heightened uncertainties from the Middle East and noted that the central bank’s policy stance allows officials to assess the impact of the Iran war. Powell also emphasized that the central bank tends to look through supply shocks. Investors now await March’s consumer confidence index and February’s JOLTS job openings data due later today for further guidance. Treasury yields were further pressured by growing concerns over the economic fallout from the Iran war, currently outweighing inflation worries from surging oil prices.

The yield on the US 10-year Treasury note fell about 10bps to 4.34% on Monday, easing from the July 2025 highs reached on Friday, as investors focused on developments in the Middle East and their implications for growth and the monetary policy outlook. Oil prices continued to climb to fresh highs not seen since 2022, reinforcing expectations that higher energy costs could weigh on the economy and limit the Fed’s room to raise interest rates. As a result, the probability of a Fed rate hike in 2026 dropped to around 20%, from roughly 35% at the end of last week. Meanwhile, yields extended the decline after Fed Chair Powell said that President Trump’s tariffs resulted in a one-time price bump and that the central bank has little control over supply shocks such as the war-driven surge in oil prices. Attention also turns to a busy economic calendar, with key releases including the ISM Manufacturing PMI and the jobs report, which should offer further insight into the health of the economy.

The yield on the US 10-year Treasury note eased to around 4.4% on Monday but remained near its highest levels since July 2025, as investors weighed the escalating Middle East conflict and its impact on inflation, growth, and interest rates. Tensions intensified after Trump said he could “take the oil in Iran” and seize its export hub on Kharg Island, echoing the US military operation in Venezuela earlier this year. The US is also reportedly preparing for weeks of ground operations in Iran after additional troops arrived in the region. Meanwhile, Iran-backed Houthi militants in Yemen joined the conflict after targeting Israel over the weekend. Surging oil prices from the Iran war bolstered hawkish bets on Federal Reserve policy, with markets speculating on a possible rate increase this year. Investors now look ahead to key US jobs data this week, including the JOLTS and ADP private payrolls reports. The March jobs report will also be released on Friday despite a holiday.