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The yield on the US 10-year Treasury note hovered near 4.42% on Thursday, holding at more than one-month highs after the Federal Reserve left its policy rate unchanged as expected but delivered a more hawkish tone amid mounting inflation concerns. Four policymakers dissented, arguing the Fed should no longer signal any bias toward easing. This underscored growing internal divisions over the policy outlook as uncertainty intensifies due to the conflict with Iran.
Markets have now fully priced out expectations of Fed rate cuts this year and have even begun assigning some probability to a rate hike in 2027. Additional upward pressure on Treasury yields came from inflation risks linked to Middle East tensions, after President Donald Trump stated that the US would maintain its naval blockade on Iran until a new nuclear agreement is reached. Tehran, in turn, accused Washington of trying to force Iran into capitulation through economic pressure and by exploiting its internal political fractures.
