FX.co ★ US 10-Year Yield Pulls Back

The yield on the 10-year US Treasury note slipped to 4.35% on Friday, 10 bps below the nine-month high reached just two sessions earlier, as easing energy prices tempered the inflation outlook. Iran submitted a new proposal for US consideration after President Trump rejected earlier concessions and vowed to maintain the naval blockade, which—together with Iranian threats—has curbed energy and goods exports from the Middle East.

The retreat in energy prices helped alleviate concerns about broader inflationary pressures. Even so, recent economic data remained consistent with a hawkish stance from the Federal Reserve. ISM Manufacturing prices climbed to a four-year high and new orders grew at a faster pace in April, while core PCE inflation accelerated in March. In addition, the latest jobless claims data pointed to further strengthening in an already robust US labor market. These developments followed three hawkish dissents at the Fed’s most recent meeting, underscoring the rate-setting committee’s heightened vigilance over inflation risks.