FX.co ★ US 10-Year Yield Rebounds

The yield on the 10-year US Treasury note climbed back to 4.5% on Friday, partially reversing the prior session’s 10 bps drop amid renewed uncertainty over the Iran deal signaled by President Trump. The US President condemned reports that Iran had struck an Indian vessel and rejected claims that Tehran had offered concessions different from those originally agreed, casting doubt on an agreement that would have restored energy flows from the Middle East. As a result, recent sharp declines in oil and fuel prices were pared, limiting the potential disinflationary impact. Expectations that the Federal Reserve will raise interest rates this year had already firmed after both consumer and producer price inflation climbed to multi-year highs in May. At the same time, the University of Michigan’s consumer sentiment survey indicated that inflation expectations in the first half of June eased from earlier peaks, following the recent pullback in energy prices.