The yield on the US 10-year Treasury note climbed about 5 bps to 4.3% on Friday, its highest level since August 2025, as investors continued to gauge the inflationary impact of the war with Iran and prepared for a potentially more hawkish stance from the Federal Reserve. Oil prices fell during Asian trading on Friday but later reversed course, rebounding to levels last seen in 2022. The move highlighted ongoing volatility in energy markets at a time when strikes in the Middle East persist.
On Wednesday, the Federal Reserve left the federal funds rate unchanged. Its updated projections still indicate one rate cut this year, but policymakers emphasized uncertainty surrounding the economic fallout from the war and pointed to elevated upside risks to inflation. Meanwhile, the yield on the 2-year Treasury note, which is more sensitive to expectations for near-term Fed policy, rose nearly 10 bps to 3.9%.
