The yield on the US 10-year Treasury note rose to 4.48% on Wednesday, its highest level since July 2025, amid mounting evidence that the conflict involving Iran is adding to inflationary pressures. Producer prices increased 1.4% month-on-month, the largest gain since 2022, driven primarily by higher energy costs. A day earlier, data showed that both headline and core consumer inflation accelerated more than expected, reinforcing concerns that price pressures are becoming more entrenched.
At the same time, tensions between the US and Iran show little sign of easing, heightening expectations that elevated oil prices could persist. In response, investors increasingly anticipate that the Federal Reserve will leave interest rates unchanged for the rest of the year, while the implied probability of a 25 bps rate hike in December has climbed to above 30%.
