FX.co ★ Treasury Yields Climb As Inflation Concerns Persist

The yield on the US 10-year Treasury note rose to 4.36% on Thursday, easing back from an intraday high of 4.39%, as investors continued to weigh developments in the Middle East and their potential impact on oil prices, inflation, and economic growth. Signals regarding a possible de-escalation remain mixed. A five-day pause in US strikes on Iranian energy infrastructure is set to expire, while President Trump has warned of an escalation in military action amid limited signs of compromise from Tehran. Conflict-related disruptions have driven energy prices higher, amplifying inflation concerns and bolstering expectations that the Federal Reserve will keep interest rates unchanged for the remainder of the year.

On the data front, initial jobless claims inched up to 210K, while continuing claims declined to their lowest level in nearly two years. Meanwhile, the yield on the 2-year Treasury note, which is particularly sensitive to expectations for short-term Fed policy, jumped by nearly 30 basis points to 3.9%.