FX.co ★ Treasury Yields Approach June Highs Again

The yield on the US 10-year Treasury note held above 4.4% on Tuesday, hovering near the highs last seen in March, as persistent tensions in the Middle East and rising oil prices continued to stoke inflationary pressures. Headline inflation accelerated to 3.8% in March — the highest rate since March 2023 and above market expectations of 3.7% — largely driven by higher gasoline prices. Core inflation also surprised to the upside, edging up to 2.8%.

Amid the geopolitical uncertainty, US President Donald Trump warned that the ongoing ceasefire was “on life support” after Tehran issued what he called an “unacceptable” response to Washington’s proposal to end the conflict. Against this backdrop, the Federal Reserve is widely expected to keep interest rates unchanged for the remainder of the year, while futures markets are currently pricing in roughly a 27% probability of a 25-basis-point rate hike in December.