The yield on the US 10-year Treasury note edged up 2 bps to 4.09% on Wednesday, marking a third straight session of gains as investors digested developments in the Iran conflict, tariff news, and fresh economic data.
According to a New York Times report, Iranian operatives have signaled a willingness to discuss terms for ending the conflict, prompting a pullback in oil and gas prices. Still, the bond market remains under pressure amid concerns that the war with Iran and the associated spike in energy costs could stoke an inflationary spiral.
In response, traders have further tempered expectations for Federal Reserve rate cuts. Markets now see the next cut occurring in September instead of July, though two 25 bps reductions are still priced in before year-end.
Meanwhile, the Treasury Secretary confirmed that the global 15% tariff will take effect this week and said he expects the levies to return to prior levels within five months.
On the data front, the ISM Services PMI showed that the US services sector unexpectedly expanded at its fastest pace since mid-2022.
