FX.co ★ US 10-Year Yield Holds Pullback

The yield on the 10-year US Treasury note remained lower around 4.46% on Monday after the United States and Iran reached an agreement that eased inflationary pressures in both the US and the global economy. President Trump and Iranian officials announced that concessions for a memorandum of understanding had been agreed and are scheduled to be formally signed on Friday, with reports indicating that energy exports through the Strait of Hormuz will be restored. As a result, inflationary risks receded further as oil and fuel prices continued to decline.

The Federal Reserve is expected to leave interest rates unchanged on Wednesday, following the first FOMC meeting chaired by Kevin Warsh. Markets will be watching closely for any indications of potential changes to the existing monetary policy framework, which Warsh has previously criticized. Interest-rate futures continue to price in a slight probability of one rate increase by the central bank later this year.

Elsewhere, the Bank of Japan is expected to raise interest rates this week, following the European Central Bank’s move earlier this month. In contrast, the Bank of England, Swiss National Bank, Riksbank, and Reserve Bank of Australia are all anticipated to keep their policy rates on hold.