Odaily Planet Daily report: Amid signs of a stalemate in peace negotiations between the United States and Iran, U.S. Treasury prices fell as investors feared that elevated energy costs would exacerbate inflation and prompt the Federal Reserve to raise interest rates. Monday's sell-off pushed yields higher in the $31 trillion U.S. Treasury market, with the 10-year yield rising approximately 6 basis points to nearly 4.5%, while oil prices climbed more than 7%.
The two-year Treasury yield, most sensitive to Fed policy expectations, also rose about 6 basis points to 4.07%. This followed Iran’s suspension of talks with the U.S. through intermediaries in protest of Israel’s actions, prompting traders to increase expectations that the Fed’s next move will be a rate hike. Swap markets show traders have fully priced in one rate hike by March 2027 and see a 50% chance of a hike as early as October. (Jin10)