FX.co ★ US 10-Year Yield Climbs on Middle East Escalation

The yield on the US 10-year Treasury note climbed to around 4.27% on Monday, retracing the previous session’s decline as renewed US-Iran tensions stoked inflation concerns. President Donald Trump said the US Navy fired on and seized an Iranian-flagged cargo vessel in the Gulf of Oman after it ignored orders to stop while exiting the Strait of Hormuz. In response, Tehran reversed plans to reopen the strait following Washington’s refusal to lift its blockade on Iranian ports and declared it would not take part in a second round of negotiations. The protracted conflict has unleashed a severe energy supply shock, intensifying inflation risks and increasing the likelihood of further central bank tightening, while also weighing on expectations for Federal Reserve rate cuts this year. The Fed is now widely expected to leave policy rates unchanged this month and to keep them on hold for the remainder of 2026.