US 10-Year Yield Steadies Ahead of Fed Meeting

The yield on the 10-year US Treasury note held around 4.47% on Tuesday after easing in the previous session, as investors shifted their focus from the US-Iran peace deal announcement to the Federal Reserve’s upcoming policy meeting. The central bank is widely expected to keep interest rates unchanged at its first meeting under new chair Kevin Warsh. Still, the Fed faces a challenging backdrop, with recent inflation data coming in hotter than expected as the conflict with Iran pushed energy prices higher. Investors also awaited policy decisions from central banks in Japan, Australia, the UK, and other major economies this week. On Monday, Treasury yields declined after President Donald Trump announced that the US had reached a peace agreement with Iran that would restore access through the Strait of Hormuz, allaying inflation and rate hike worries.

The yield on the 10-year US Treasury note held losses at the 4.46% level on Monday as the US and Iran agreed to a deal that softened inflationary risks in the US and global economy. President Trump and Iranian authorities stated that concessions for an memorandum of understanding were agreed and will be signed on Friday, with reports indicating that energy exports through the Strait of Hormuz will be restored. Pro-inflationary risks dropped as oil and fuel prices retreated further. The Federal Reserve is due hold its rates unchanged on Wednesday following the FOMC's first meeting with Chairman Kevin Warsh, set to give signals on potential overhauls to the current monetary framework that he has criticized. Rate traders continued to slightly favor one rate hike by the central bank this year. Meanwhile, the BoJ is due to raise rates this week, as done by the ECB this month, although the BoE, SNB, Riksbank, and RBA are set to hold rates unchanged.

The yield on the 10-year US Treasury note declined to around 4.43% on Monday, reaching its lowest level in a month after the US and Iran reached a peace agreement that would reopen the Strait of Hormuz. The development sent oil prices to a two-month low, easing concerns over inflationary pressures and reducing expectations of tighter monetary policy. The agreement is due to be signed in Switzerland on June 19 and reportedly includes the removal of blockades, sanctions relief for Iran, and the dismantling of Tehran’s nuclear program. Investors are now focused on the US Federal Reserve’s first policy meeting under new chair Kevin Warsh, where policymakers are widely expected to leave interest rates unchanged. Elsewhere, the Reserve Bank of Australia and the Bank of England are also expected to keep policy settings intact this week, while the Bank of Japan is anticipated to raise rates to support the yen.