FX.co ★ Treasury Yield Rally Pauses

The yield on the US 10-year Treasury note was little changed around 4.23% on Thursday, pausing a two-session upswing that had lifted the benchmark by about 13 basis points. Investors continued to assess escalating tensions in the conflict involving Iran, the absence of a swift resolution, and further gains in energy prices, with higher oil costs reinforcing expectations of persistent inflationary pressures.

On the data front, initial jobless claims came in at 212K, slightly below forecasts and broadly in line with recent weeks, while the US trade deficit narrowed in January.

Looking ahead to next week’s Federal Reserve meeting, policymakers are widely expected to leave the federal funds rate unchanged. Market attention will center on the updated dot plot and the Fed’s projections for the remainder of the year. Futures pricing currently implies expectations for just one 25-basis-point move, most likely in September.