FX.co ★ Treasury Sell-Off Eases

The yield on the US 10-year Treasury note declined to 5.23% on Friday, pressured by a pullback in oil prices following reports that European countries were considering releasing strategic reserves. Softer oil prices have temporarily eased inflation concerns, while investors now turn their attention to the upcoming jobs report for indications of labor-market strength and further guidance on the Federal Reserve’s policy outlook. Markets have scaled back expectations for additional Fed rate increases to just one more hike this year, with the anticipated timing shifting from October to December. Projections for more than three rate hikes over the next 12 months have also diminished. Earlier this week, the benchmark 10-year yield rose above 5.34%—its highest level since 2002—driven by expectations of further Fed tightening, ongoing uncertainty surrounding the Middle East conflict, worries over the US fiscal and debt trajectory, and resilient economic data.