The yield on the US 10-year Treasury note was little changed at 4.3% on Thursday, holding at its lowest level since mid-March, as investors continued to track developments in the Middle East. A recently announced ceasefire appeared increasingly fragile ahead of peace talks scheduled for Friday. The agreement showed signs of strain as Israel maintained its hostilities with Hezbollah in Lebanon, while Tehran accused the US of violating the terms of the deal. Meanwhile, the Strait of Hormuz remained closed and oil prices resumed their climb.
On the data front, February PCE inflation came in exactly as expected, while Q4 GDP growth was revised lower and initial jobless claims ticked higher. Market attention now shifts to the March CPI report, due tomorrow, for clues on how the Middle East conflict has affected prices so far. Minutes from the FOMC’s March meeting indicated that policymakers were concerned the war could fuel persistent inflation that might require additional rate hikes, although they still projected one rate cut this year.
