Treasury Yields Approach June Highs Again

2026-05-12 12:50 By Joana Taborda 1 min. read

The yield on the US 10-year Treasury note remained elevated above 4.4% on Tuesday, nearing the highs reached in March, as tensions in the Middle East showed little sign of easing and rising oil prices continued to fuel inflationary pressures.

Headline inflation accelerated to 3.8% in March, the highest level since March 2023 and above market expectations of 3.7%, driven largely by higher gasoline prices.

Core inflation also surprised to the upside, rising to 2.8%.

US President Donald Trump said the ongoing ceasefire was “on life support” after Tehran delivered what he described as an “unacceptable” response to Washington’s proposal to end the conflict.

Against this backdrop, the Fed is widely expected to keep interest rates on hold throughout the year, while markets currently price in a roughly 27% probability of a 25bps rate hike in December.



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US 10-Year Yield Steady Ahead of Inflation Data
The yield on the US 10-year Treasury note was little changed around 4.88% on Tuesday, holding near two-month lows as investors awaited the October CPI report, with both headline and core inflation expected to ease amid stabilizing energy prices. Richmond Fed President Tom Barkin said on Monday that the Federal Reserve should approach monetary policy adjustments “with care,” as persistent inflation remains its primary concern. Markets are currently pricing in an 84% probability of a Fed rate hike in December, up considerably from approximately 74% a week earlier following last week’s stronger-than-expected employment data. Meanwhile, inflationary concerns eased as oil prices extended their decline amid growing optimism over a potential US-Iran peace agreement. President Donald Trump expressed confidence that the conflict in Iran was nearing an end following discussions with Qatar’s prime minister.
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US 10-Year Yield Steadies on Strong Jobs Data
The yield on the US 10-year Treasury note steadied around 4.85% on Monday, halting a recent decline as stronger-than-expected employment figures reinforced expectations of a Federal Reserve rate hike in December. Nonfarm payrolls increased by 165,000, more than double the 65,000 forecast, while the unemployment rate edged lower to 4.1%, underscoring the resilience of the US labor market. Markets are now pricing in an approximately 81% probability of a Fed rate increase in December, up from 71% before the employment report. Investors are now awaiting key US inflation releases this week for further indications of the Fed’s monetary policy direction, with the CPI due on Tuesday and the PPI scheduled for Friday. Meanwhile, demand for safe-haven bonds weakened as global equity markets rebounded from the recent AI-driven selloff, which was fueled by concerns over tighter AI industry regulations following the Democrats’ decisive victory in the US midterm elections.
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