FX.co ★ US 10Y Yield Edges Higher on Inflation Risks

The yield on the US 10-year Treasury note rose to about 4.24% on Thursday, a five-week high, as renewed gains in oil prices intensified inflation concerns and further diminished the odds of near-term Federal Reserve rate cuts. Crude prices advanced for a second straight session as fears of a prolonged conflict involving Iran overshadowed a coordinated release of strategic reserves by major economies; the IEA approved its largest-ever drawdown of 400 million barrels. Supply risks were underscored when Iraq halted operations at its oil terminals after two tankers were attacked in its territorial waters. On the data front, February inflation matched expectations, with CPI remaining stable but still above the Fed’s target. The latest jump in energy prices tied to the conflict has yet to be fully reflected in the figures. Markets broadly expect the Fed to leave the federal funds rate unchanged next week, with futures pricing in only one 25 bps cut, likely in September.