The yield on the US 10-year Treasury note rose to 4.37% on Tuesday, retracing part of the previous session’s 4 bps decline, as traders continued to weigh the evolving conflict with Iran and the prospects for de-escalation. While reports highlight ongoing diplomatic contacts and efforts to end the war, hostilities have persisted despite President Trump’s announcement of a five-day pause. Market anxiety was further stoked by a Wall Street Journal report that Saudi Arabia and the UAE are moving closer to joining the conflict against Tehran. Iran has continued to target US bases in the Gulf and insists that no negotiations with Washington are taking place.
At the same time, oil prices remain on an upward trajectory, sustaining inflation pressures and prompting traders to abandon expectations for any Federal Reserve rate cuts this year. Last week, the Fed left the federal funds rate unchanged but maintained guidance for a possible 25 bps rate cut in 2026, followed by another in 2027.
