The yield on the US 10-year Treasury note eased to 4.3% on Thursday after briefly climbing as high as 4.38% earlier in the session. The move followed reports that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz, offering some relief to markets. Still, volatility is expected to remain elevated amid increasingly heated rhetoric from President Trump and as crude prices hover near their highest levels since 2022.
Oil prices jumped after Trump vowed to take more aggressive action against Iran. The resulting surge in energy costs has intensified concerns about an inflationary spiral that could push the Federal Reserve toward a more hawkish policy stance. Earlier this week, Fed Chair Jerome Powell said officials may eventually need to respond to the economic fallout from the conflict, but not yet, noting that current policy remains well suited to a wait-and-see approach. Markets are still pricing in no change to the federal funds rate for the remainder of the year. In the meantime, US bond trading will pause on Friday, when the market is closed for the Easter holiday.
