US 10Y Yield Rises Ahead of Fed Decision

The yield on the US 10-year Treasury note climbed to around 4.35% on Tuesday, marking a one-month high as investors positioned ahead of the upcoming Federal Reserve policy meeting. The central bank is widely expected to keep interest rates unchanged in what could be Jerome Powell’s final meeting as Fed chair. Fed nominee Kevin Warsh has emphasized policy independence in decision-making, even as markets continue to price in a more aggressive rate-cutting path ahead. Investors are also watching policy decisions from other major central banks this week, including the ECB, BOE, and BOJ. On the geopolitical front, Iran reportedly sent a new proposal to the US through Pakistani mediators, offering to reopen the Strait of Hormuz if Washington lifts its blockade, though Tehran’s nuclear program remains a key sticking point in negotiations.

The yield on the US 10-year Treasury note hovered around 4.32% on Monday, little changed but maintaining last week’s gains as stalled US–Iran peace negotiations kept markets cautious amid ongoing geopolitical tensions. President Donald Trump cancelled plans to send senior envoys to Pakistan for a second round of talks with Iran, while Tehran reiterated it would not engage in negotiations under threats or blockade conditions. Oil prices rallied again as the Middle East conflict entered its ninth week and the Strait of Hormuz remained effectively closed, fueling inflation concerns and increasing the likelihood that central banks may keep interest rates higher for longer or even tighten further. Meanwhile, the Federal Reserve is widely expected to leave its policy rate unchanged on Wednesday, a meeting that could mark Jerome Powell’s final one as chair before Kevin Warsh is anticipated to take over in May.

The yield on the US 10-year Treasury note was little changed at 4.32% on Friday as traders continued to focus on developments in the Middle East. Al Jazeera reported that government sources indicated a “high likelihood of a breakthrough” in US–Iran talks in Islamabad, with a delegation led by Iran’s Foreign Minister expected to arrive in the Pakistani capital tonight. In addition, US President Trump announced a three-week extension to the ceasefire in Lebanon, which was due to expire on Sunday. Meanwhile, traders also digested news that a probe of Fed Chair Powell s being dropped. Still, the benchmark yield is up about 7bps on the week, as the stalemate in US–Iran talks and the near closure of the Strait of Hormuz continue to support oil prices and add to inflationary pressures, prompting traders to reassess the interest rate outlook. The Fed is widely expected to keep the federal funds rate unchanged next week, with no further rate changes anticipated for the remainder of the year.