FX.co ★ US 10-Year Treasury Yield at 2-Month High

The yield on the US 10-year Treasury note rose for a second straight session on Tuesday to 4.62%, its highest level since mid-May, as investors weighed ongoing developments in the Middle East and a renewed surge in oil prices. Inflation fears have re-emerged amid escalating tensions between the US and Iran, with the two countries exchanging strikes for a tenth consecutive day.

On the monetary policy front, Fed Chair Warsh has repeatedly emphasized that inflation remains a central concern for the Federal Reserve, a view echoed by several other officials in recent weeks. Policymakers have now entered their customary blackout period ahead of next week’s FOMC meeting, where the central bank is widely expected to leave the federal funds rate unchanged. Still, expectations for further tightening later in the year remain elevated, with traders assigning roughly a 68% probability to a rate hike at the September meeting.