FX.co ★ US 10-Year Yield Declines

The yield on the 10-year US Treasury note eased to 4.28% on Wednesday, paring a steeper morning decline but extending its pullback from the eight-month high of 4.45% reached two weeks earlier. The moderation came as a temporary ceasefire between Iran and the United States tempered fears of an energy-driven inflation spike. Under the agreement, both sides suspended threats of further escalation and pledged to increase tanker traffic through the Strait of Hormuz, partially restoring energy export flows.

However, subsequent strikes despite the ceasefire, alongside reports of intercepted tankers, constrained optimism over a sustained easing in energy risks. The energy shock triggered by the conflict has already pushed up global energy costs and, according to the latest FOMC meeting minutes, led several policymakers to heighten their concerns about inflationary pressures, even as others continued to emphasize risks related to the labor market.

The first clear read on the impact of higher energy prices will come on Friday with the release of the US CPI report, which is expected to show inflation accelerating to a two-year high.