FX.co ★ US 10-Year Yield Holds Advance

The yield on the US 10-year Treasury note hovered near 4.41% on Friday and was on track for a sharp monthly increase, driven by escalating uncertainty surrounding the Middle East conflict and its potential impact on oil prices, inflation, and global growth. Recent reports suggest the Pentagon is weighing the deployment of up to 10,000 additional ground troops to the region, a move that would strengthen the White House’s hand in ongoing negotiations. At the same time, President Trump extended by 10 days the deadline for a strike on Iranian energy infrastructure and remarked that Iran had allowed 10 oil tankers to transit the Strait of Hormuz this week as a “present” to the US. The conflict and related supply risks have pushed energy prices higher, intensifying inflation concerns and bolstering expectations of a more hawkish Federal Reserve. Futures markets now assign nearly a 50% probability to a Fed rate hike by December, a stark shift from earlier forecasts that had penciled in two rate cuts this year.