The yield on the US 10-year Treasury note inched up to 4.27% on Wednesday after falling for two consecutive sessions, but remained close to one-month lows. Investors continued to price in a de-escalation of tensions between the US and Iran, while oil prices held below recent peaks.
Both equity and bond markets have steadily unwound much of the risk premium that accumulated after the conflict began in late February, as Washington and Tehran move toward a second round of talks. US President Trump said the conflict is “very close to over” and suggested Iranian officials appear willing to strike a peace deal, with further negotiations expected soon.
At the same time, the Federal Reserve is widely expected to leave the federal funds rate unchanged later this month and for the remainder of the year. Chicago Fed President Austan Goolsbee indicated that any rate cuts could be pushed back to 2027, depending on how long oil prices remain elevated.
