The yield on the US 10-year Treasury note climbed for a third consecutive session on Wednesday, reaching 4.09%, as escalating concerns that the conflict with Iran and the accompanying spike in energy prices could trigger an inflationary spiral continued to pressure the bond market. Investors worry that stubborn inflation may constrain the Federal Reserve’s ability to lower borrowing costs.
Market participants have scaled back their expectations for rate cuts, now projecting the next reduction in September rather than July, though they still anticipate two 25-basis-point cuts before the end of the year. Despite the US-Israeli conflict with Iran entering its fifth day—typically a backdrop that boosts demand for safe-haven assets—Treasuries saw little of their usual defensive appeal, as inflation fears overshadowed haven buying.
