The yield on the 10-year US Treasury note declined to 4.46%, extending its pullback from the 16‑month high of 4.7% reached on May 20th, as reports of an interim agreement between the United States and Iran eased the inflation outlook. According to those reports, Washington and Tehran have agreed to a 60‑day memorandum of understanding that prolongs the current ceasefire and gradually normalizes the passage of tankers and commercial vessels through the Strait of Hormuz.
The improved prospects for energy supply led to a partial reversal of the recent rebound in energy prices, easing inflation concerns even as new data confirmed a renewed rise in price pressures. PCE inflation accelerated to 3.8% in April, its highest level in three years, while consumer spending remained relatively strong and initial jobless claims stayed low.
At the same time, hawkish commentary from Federal Open Market Committee officials limited further declines in Treasury yields. Fed Vice Chair Jefferson cautioned that inflation risks remain skewed to the upside, and Minneapolis Fed President Kashkari emphasized that consumer prices are still “much too high.”
