US 10-Year Yield Rises on US-Iran Uncertainty

The yield on the US 10-year Treasury note climbed to around 4.39% on Monday, reversing the previous session’s decline as ongoing US-Iran tensions kept inflation risks in focus. President Donald Trump rejected Iran’s response to his peace proposal as “TOTALLY UNACCEPTABLE,” with negotiations stalled over how to end the 10-week conflict. Reports indicated that Tehran had offered to transfer part of its highly enriched uranium stockpile to a third country, while refusing to dismantle its nuclear facilities. On the economic front, data released Friday showed US nonfarm payrolls increased by 115,000 in April, well above expectations for a 62,000 gain, reinforcing expectations that the Federal Reserve will keep interest rates unchanged this year. Investors are now awaiting April US inflation data for further clues on how higher oil prices are feeding through to broader price pressures in the economy.

The yield on the US 10-year Treasury note fell to 4.35% on Friday, approaching the two-week lows touched earlier in the week, as developments in the Middle East continued to dominate investor sentiment. Uncertainty persists over how quickly the US and Iran can reach an agreement to end the conflict, with US Secretary of State Marco Rubio saying Washington expects a response from Tehran on Friday regarding a proposal to end the war. Although President Trump said the ceasefire remains in effect, both the US and Iran have reportedly exchanged fire in the Strait of Hormuz. Meanwhile, the latest jobs report showed the US economy added 115K jobs last month, nearly double market expectations of 62K. In addition, the Michigan Consumer Sentiment survey showed confidence fell to a record low. Markets continue to expect the Fed to keep interest rates largely unchanged through the rest of the year, while pricing in roughly a 40% chance of a rate hike by April 2027.

The yield on the US 10-year Treasury note was little changed around 4.38% on Friday, as traders continued to monitor developments in the Middle East while the latest jobs report had limited impact on markets. Uncertainty remains over how quickly the US and Iran can reach an agreement to end the conflict, after US forces struck missile and drone launch sites, along with other military assets in Iran, which Washington said were linked to attacks on three US warships transiting the Strait of Hormuz. Still, President Trump said the ceasefire remains in effect. Meanwhile, the jobs report showed the US economy added 115K jobs last month, nearly double market expectations of 62K. The unemployment rate held steady at 4.3% while wage growth remained at 0.2% month-over-month, below expectations of a 0.3% increase. Markets expect the Fed to keep interest rates largely unchanged through the rest of the year, while pricing in roughly a 40% chance of a rate hike by April 2027.