The yield on the US 10-year Treasury note climbed to 4.36% on Monday, its highest level in about a week, as traders returned from an extended holiday and continued to assess the economic and geopolitical fallout from the six-week-old war with Iran, with oil prices trading near their highest levels since 2022.
President Trump threatened to begin targeting Iran’s power plants on Tuesday, while Iran has continued to strike energy infrastructure in neighboring Gulf states. However, reports that Iran, the US, and a group of regional mediators are discussing a possible 45-day ceasefire that could serve as a step toward ending the conflict, along with indications that more vessels are transiting the Strait of Hormuz, provided some temporary relief to markets.
Investors now turn their attention to a series of upcoming data releases that will offer further insight into the strength of the US economy, including the consumer price index (CPI) and the minutes from the latest Federal Open Market Committee (FOMC) meeting. Markets have fully priced in expectations that the Federal Reserve will keep the federal funds rate unchanged later this month and anticipate that borrowing costs will remain steady for the rest of the year.
