FX.co ★ US 10-Year Treasury Yield Falls to 7-Week Low

The yield on the US 10-year Treasury dropped to 4.31% on Tuesday, marking its lowest point in seven weeks. This decline followed Federal Reserve Chair Jerome Powell's remarks indicating that while there are "many paths" for monetary policy, there remains the potential for a rate cut in July. Powell emphasized a cautious approach, assuring that the Fed would respond promptly should the labor market show signs of weakness. Current market expectations are fully factoring in two rate cuts by the close of the year, with a 25% probability of a third cut. These developments came after the Federal Reserve's decision last week to maintain steady interest rates for the fourth consecutive meeting. Additional insights from Fed officials, including Waller and Bowman, also suggested that rate reductions could be forthcoming. On the global front, investors kept a watchful eye on the renewed tensions between Iran and Israel, despite a recent ceasefire declaration. Although President Trump conveyed optimism that the truce would persist, new strikes have cast doubt on its stability. Nonetheless, the continuous flow of tanker traffic through the Persian Gulf has alleviated fears of significant disruptions in energy supply, thus easing concerns over potential inflation increases.