FX.co ★ Treasury Yields Fall on Economic Worries

The yield on the US 10-year Treasury note fell about 6 basis points to 4.37% on Monday, retreating from the highs last seen in July 2025 that were reached on Friday. The move came as investors focused on escalating tensions in the Middle East and their potential impact on economic growth and the monetary policy outlook. Rising oil prices, which climbed to their highest levels since 2022, reinforced concerns that elevated energy costs could weigh on activity and constrain the Federal Reserve’s ability to raise interest rates further. Consequently, the implied probability of a Fed rate hike in 2026 dropped to around 20%, from roughly 35% at the end of last week. Markets are also looking ahead to a busy economic data calendar, with key releases such as the ISM Manufacturing PMI and the monthly jobs report expected to provide additional insight into the underlying strength of the US economy.