The yield on the US 10-year Treasury note climbed to about 4.2% on Monday, its highest level in nearly a month, as oil prices surged past $100 a barrel. The move reflected growing concern that a prolonged conflict in the Middle East could trigger sustained disruptions to global energy supplies.
Since the outbreak of hostilities last week, investors have been reassessing their inflation outlook, thereby strengthening expectations that the Federal Reserve may postpone interest rate cuts. The war involving Iran entered its second week with no resolution in sight, while President Donald Trump maintained a hard line, demanding Tehran’s unconditional surrender. At the same time, Iran’s decision to appoint Mojtab Khamenei as successor to his father as Supreme Leader underscored that hardliners remain firmly in control.
On Friday, unexpectedly weak US employment data had bolstered hopes for Fed easing. However, those expectations largely unwound on Monday as the sharp rise in oil prices reignited worries about renewed inflationary pressures.
