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

The yield on the US 10-year Treasury note climbed to around 4.4% on Monday, an eight-month high, as surging oil prices linked to the Iran conflict stoked inflation fears and dampened expectations for Federal Reserve rate cuts this year. The US-Israel war with Iran entered its fourth week with no sign of de-escalation, with President Donald Trump threatening strikes on Iranian power plants if the Strait of Hormuz is not reopened, while Tehran warned it would target key US and Israeli assets across the region if its energy infrastructure were attacked. Markets pared back expectations for further Fed rate cuts, and some traders even began to price in the possibility of a rate hike toward year-end. Last week, the central bank left its policy rate unchanged as anticipated, with Chair Jerome Powell stating it was too early to assess the full economic impact of the Iran conflict. The ECB, BOE, and BOJ also kept rates on hold but signaled they remain prepared to tighten policy further if inflationary pressures persist.