US 10Y Yield Rises as US-Iran Talks Fail

The yield on the US 10-year Treasury note climbed to around 4.35% on Monday, reversing last week’s decline as escalating tensions in the Middle East heightened inflationary pressures. President Donald Trump announced a blockade of the Strait of Hormuz after weekend peace talks between the US and Iran ended without an agreement. Vice President JD Vance left Islamabad without securing a deal with Iranian counterparts, citing their refusal to halt efforts to pursue nuclear weapons, while Tehran reportedly demanded control of the Strait of Hormuz, war reparations, and the release of frozen assets. The effective shutdown of the key shipping route has pushed energy prices higher and intensified inflation risks, reinforcing expectations that the Federal Reserve may delay rate cuts or even consider rate hikes.

The yield on the US 10-year Treasury note edged up to 4.31% on Friday, moving slightly away from three-week lows reached in the previous session, investors continued to monitor developments in the Middle East and assess fresh data. US and Iranian delegations are set to meet in Pakistan on Saturday, while Israel has agreed to hold talks with Lebanon’s government, raising hopes of de-escalation in the region. The impact of the war with Iran is already being reflected in US inflation data. Consumer prices rose 0.9% in March, the largest monthly increase since June 2022, pushing the annual rate to 3.3%, the highest since May 2024. Core CPI, however, rose more modestly to 2.6%. Meanwhile, consumer sentiment plunged to a record low in April and inflation expectations for the year ahead also moved sharply higher. Investors currently see little chance of another interest-rate cut by the Fed in 2026 and many economists are maintaining forecasts for one or more reductions later in the year.

The yield on the US 10-year Treasury note was little changed around 4.3% on Friday, hovering close to three-week lows, as investors continued to monitor developments in the Middle East and assess the latest US CPI report. US and Iranian delegations are set to meet in Pakistan on Saturday, while Israel has agreed to hold talks with Lebanon’s government, raising hopes of de-escalation in the region. The impact of the war with Iran is already being reflected in US inflation data. Consumer prices rose 0.9% in March, the largest monthly increase since June 2022, pushing the annual rate to 3.3%, the highest since May 2024 and in line with expectations. Core CPI, however, rose more modestly to 2.6% from 2.5%, suggesting that the full impact of the oil shock has yet to pass through to underlying inflation. Investors currently see little chance of another interest-rate cut by the Fed in 2026 and many economists are maintaining forecasts for one or more reductions later in the year.