FX.co ★ US 10-Year Yield Steadies Ahead of Powell Testimony

The yield on the US 10-year Treasury note remained steady around 4.35% on Tuesday, continuing a pattern of recent declines. This stability comes as investors anticipate Federal Reserve Chair Jerome Powell's semi-annual testimony before Congress, hoping for insights on the central bank's future policy direction. Yields declined on Monday following comments from Fed Governor Michelle Bowman, who suggested she might endorse a rate cut in July if inflation shows signs of decreasing. These remarks mirrored the dovish sentiment expressed by Governor Christopher Waller last week. Consequently, markets have increased their probabilities on a monetary easing approach, now forecasting approximately 55 basis points of rate reductions by the end of the year. Simultaneously, investors have been evaluating the reduction in geopolitical tensions after former President Donald Trump announced a ceasefire agreement between Iran and Israel, labeling the conflict as “The 12-Day War.” Additionally, investors dismissed Iran’s retaliatory action against a US base in Qatar, as it resulted in no casualties, and the decision not to target the Strait of Hormuz has alleviated concerns over potential disruptions to the global oil supply.