The yield on the US 10-year Treasury note climbed nearly 10 bps to 4.58% on Friday, marking a new one-year high as concerns about war-driven inflation intensified. The situation in the Middle East remains highly fragile and far from resolved, with US President Trump calling the opening line of Iran’s latest proposal “unacceptable.”
Oil prices continued to rise on fears of disruptions to global supply, with the Strait of Hormuz still closed. At the same time, a summit between President Trump and Chinese President Xi concluded without any major breakthroughs, including any sign that Beijing would assist in resolving the conflict.
Both the CPI and PPI reports released this week indicated that the energy shock is pushing US inflation higher. Traders are now fully pricing in one Federal Reserve rate hike in March next year, and see more than a 50% probability of additional increases before the end of 2026.
