US 10-Year Treasury Note Hits 9-Month High

The yield on the US 10-year Treasury note edged down to 4.42% on Tuesday, after rising by around 6bps to its highest level since July 2025 in the previous session. The decline came as oil prices fell nearly 4%, following a sharp spike on Monday. Traders continue to monitor developments in the Middle East, where a ceasefire appears to be holding after the US and Iran exchanged fire, with the UAE also becoming involved. US Defense Secretary Pete Hegseth added that two US commercial vessels transited safely through the Strait of Hormuz with military support, providing some temporary relief over concerns about further escalation. Market participants also digested fresh economic data. The ISM Services PMI indicated a slowdown in services activity, while job openings came in slightly above expectations. Meanwhile, the US Treasury said on Monday it now expects to borrow $189 billion in the second quarter, $79 billion more than projected in February.

The yield on the US 10-year Treasury note hovered around 4.44% on Tuesday after rising more than 5 basis points in the previous session, as escalating tensions in the Middle East drove energy prices higher and intensified inflation concerns. US forces repelled Iranian attacks while escorting two US-flagged vessels through the Strait of Hormuz, while the UAE reported intercepting cruise missiles launched by Iran and attributed a major fire at its Fujairah port to a drone strike. Oil prices, the dollar, and Treasury yields advanced in tandem on expectations that the Federal Reserve may need to raise interest rates to contain inflation. Investors now turn to upcoming speeches from Fed officials and a slate of key economic releases, including the closely watched monthly jobs report. The US economy is projected to have added around 60K jobs in April, marking a sharp slowdown from the 178K increase in March.

The yield on the US 10-year Treasury note rose to 4.456% on Monday, the highest since July 2025 as tensions in the Middle East escalated pushing oil prices higher again. The UAE reported intercepting Iranian cruise missiles aimed at several locations across the country, shattering the tenuous calm that had settled in after the ceasefire in early April. At the same time, investors are also looking ahead to the Treasury Department’s announcement of its borrowing plans for the next three months, alongside several speeches from Fed officials and jobs report. On the data front, the US economy is projected to have added around 60,000 jobs in April, marking a sharp slowdown from 178,000 in March, while the unemployment rate is likely to have held steady at 4.3%. Markets currently anticipate that the Fed will keep the funds rate unchanged for the remainder of the year, although the rise in energy cost may push it to raise the borrowing cost.