FX.co ★ US 10-Year Yield Rises on Middle East Risks

The yield on the 10-year US Treasury note rose to around 4.57% on Monday, rebounding from last week’s decline as escalating tensions in the Middle East pushed oil prices higher and intensified worries about inflation and possible interest rate increases. The US military launched new airstrikes against Iran after three American service members were killed, while Tehran stated that its ceasefire with Washington had effectively collapsed and reported intercepting four vessels transiting the Strait of Hormuz over the weekend. At the same time, Cleveland Fed President Beth Hammack on Friday joined a growing number of Fed officials cautioning that inflation remains stubborn. Markets are now pricing in roughly a 53% probability of a Federal Reserve rate hike in September, up from 47% the previous day, though the central bank is still widely expected to leave rates unchanged at its meeting later this month.