US 10-Year Yield Falls for 2nd Session

The yield on the 10-year US Treasury note dropped to 4.3% on Tuesday, extending the retreat from the eight-month high of 4.44% two sessions prior as growth concerns gained ground on investors' forefront. The rebound for Treasuries reflected the high magnitude of uncertainty regarding the impact that the war in the Persian gulf will have on the US economy. Attacks by Iran on tankers in the Persian Gulf extended bets on the duration of the supply chock from the Persian Gulf, but increased concerns that the war can derail global growth limited the inflationary impact on bond yields. Despite the surge in energy prices, Federal Reserve Chairman Powell noted that inflation expectations remained grounded, limiting the urgency for a response in monetary policy as the central bank already has limited tools to combat supply shocks. The yield on the 10-year note had gained up to 40bps in March before its pullback, tracking the surge in energy prices that risk inflation across major economies.

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.