FX.co ★ US 10-Year Treasury Yield Holds Near 4.45%, Still Higher for May

The yield on the US 10-year Treasury note hovered around 4.45% on Friday, staying close to a three-week low yet still about 7 basis points higher for the month, as investors continued to track developments in the Middle East. There are growing indications that the US and Iran may be nearer than ever to an agreement: recent reports suggest the two sides have reached a preliminary understanding to extend the ceasefire by 60 days and to open talks on the future of Tehran’s nuclear program, although President Trump has not yet formally endorsed the terms.

Oil prices have retreated, helping to ease some inflationary pressure. Data released on Thursday showed that both headline and core PCE inflation for the month came in below expectations, although the annual rates remained well above the Federal Reserve’s 2% target, at 3.8% and 3.3%, respectively. Investors currently expect the Fed to leave the federal funds rate unchanged through year-end, though futures markets still assign roughly a 46% probability to a rate hike in December.