FX.co ★ Treasury Yields Edge Down

The yield on the US 10-year Treasury note fell 5 bps to 4.95% on Monday, as the new week opened with another drop in oil prices and renewed optimism that diplomatic efforts could help resolve tensions with Iran. Crude prices have now declined for four consecutive sessions, easing some concerns about a potential resurgence in inflationary pressures.

Sentiment was further supported by hopes of easing geopolitical risks, bolstered by the recent summit between President Trump and President Xi and the start of this week’s UN General Assembly. These developments helped lift investor confidence.

On the policy front, Chicago Fed President Austan Goolsbee said he remains open to the view that inflation could continue to move back toward the 2% target, but cautioned that interest rates may have to rise further if that disinflation process stalls. Several other Federal Reserve officials are also scheduled to speak this week, and markets are poised to scrutinize their remarks for additional signals on the path of monetary policy.

Futures pricing currently suggests that traders anticipate one more 25 bps rate increase from the Fed this year.