The yield on the US 10-year Treasury note climbed for a third straight session on Wednesday, reaching 4.64%—its highest level in two months—as ongoing conflict in the Middle East continued to push oil prices higher. Both the United States and Iran indicated that a resumption of peace talks is unlikely in the near term, despite continued mediation efforts.
Rising oil prices have kept concerns about renewed inflationary pressures elevated, even after last week’s June CPI and PPI releases came in softer than expected. At the same time, investors are now looking ahead to next week’s Federal Reserve policy meeting, with officials in their customary pre-meeting blackout period.
The Fed is widely expected to leave the federal funds rate unchanged. Nonetheless, markets are still pricing in the risk of additional tightening later this year, with futures implying roughly a 61% probability of a rate hike at the September meeting.
