The yield on the US 10-year Treasury note edged up to 4.31% on Friday, moving slightly off the three-week lows hit in the previous session, as investors continued to track developments in the Middle East and digest fresh economic data. US and Iranian delegations are scheduled to meet in Pakistan on Saturday, and Israel has agreed to hold talks with Lebanon’s government, developments that have raised hopes for a de-escalation in regional tensions.
The impact of the conflict with Iran is already showing up in US inflation figures. Consumer prices rose 0.9% in March, the fastest monthly increase since June 2022, lifting the annual inflation rate to 3.3%, the highest since May 2024. Core CPI, however, increased more moderately, to 2.6%.
At the same time, consumer sentiment dropped to a record low in April, and one-year inflation expectations climbed sharply. In response, investors now see little likelihood of an additional Federal Reserve interest-rate cut in 2026, while many economists continue to project one or more reductions later in the year.
