26.05.202602:16:48UTC+00US 10-Year Yield Declines in Catch-Up Trade

The yield on the US 10-year Treasury note slipped about 5 basis points to 4.5% on Tuesday as bond markets reopened after the long holiday weekend, with investors weighing the latest developments in the Middle East. President Donald Trump indicated that talks with Tehran were making good progress but cautioned that additional strikes could occur if negotiations were to break down.

At the same time, the US military struck missile launch sites and vessels suspected of attempting to deploy mines in southern Iran. US Central Command stated that these operations were aimed at protecting American troops stationed in the region.

Despite persistent geopolitical tensions, oil prices have fallen sharply over the past week amid renewed optimism that the US and Iran might reach an agreement to end the conflict and reopen the Strait of Hormuz. This has eased concerns over inflation and the prospect of further interest rate increases. Investors are now looking ahead to upcoming PCE inflation data for new signals on the Federal Reserve’s policy path.