FX.co ★ US 10Y Yield Hovers Near 11-Month High

The yield on the US 10-year Treasury note hovered around 4.46% on Thursday, remaining close to its highest level since June of last year. The move came as accelerating US inflation, partly attributed to the Iran war, strengthened expectations that the Federal Reserve will keep interest rates elevated for longer and may even deliver another rate hike. Data released Thursday showed that US wholesale prices in April rose at their fastest pace since 2022, following Tuesday’s report that consumer inflation climbed to 3.8% year-on-year, the highest level since May 2023. Markets have now fully priced out the likelihood of a Fed rate cut this year and are increasingly assigning a higher probability to an additional rate increase before year-end. At the same time, the US Senate narrowly confirmed Kevin Warsh as Federal Reserve chair on Wednesday, and investors are now evaluating whether he will preserve the Fed’s independence in the face of mounting political pressure.