The yield on the US 10-year Treasury note was little changed around 4.3% on Friday, hovering near a three-week low as investors continued to track developments in the Middle East and digest the latest US CPI data. US and Iranian delegations are scheduled to meet in Pakistan on Saturday, while Israel has agreed to hold talks with Lebanon’s government, raising hopes of de-escalation in the region.
The economic fallout from the conflict with Iran is already visible in US inflation figures. Consumer prices rose 0.9% in March, the largest monthly gain since June 2022, lifting the annual inflation rate to 3.3%—the highest since May 2024 and in line with market expectations. By contrast, core CPI edged up only slightly, to 2.6% from 2.5%, indicating that the full effect of the oil shock has yet to be fully transmitted to underlying price pressures.
In interest-rate markets, investors currently see little chance of an additional Federal Reserve rate cut in 2026, while many economists still expect one or more reductions later in the year.