The yield on the US 10-year Treasury note climbed back to 4.16% on Friday, rebounding from an earlier decline. The move reflected renewed worries about an inflationary spiral driven by surging energy prices—especially oil—which outweighed the dampening effect of weaker US labor data.
WTI crude futures neared $88 per barrel, their highest level since September 2023, as President Trump demanded that Iran surrender while the war with the Islamic Republic entered its seventh day, intensifying disruptions in global energy markets. Kuwait has begun cutting output at several oil fields, and Qatar warned that Gulf energy exporters could be forced to shut down production within weeks.
On the macroeconomic front, the US economy unexpectedly shed 92,000 jobs last month, and the unemployment rate ticked up to 4.4%. US retail sales also fell in January, in part due to softer vehicle purchases.
In response, traders now anticipate that the Federal Reserve will begin cutting interest rates in July. Markets are pricing in roughly even odds that policymakers will either deliver a second rate cut or pause by December.
