The yield on the US 10-year Treasury note fell to around 4.25% on Monday after rallying for two straight weeks, as reports that the US will soon announce a coalition of countries to escort ships through the Strait of Hormuz eased some market fears. Markets are also weighing the possibility of US-Iran negotiations as the Middle East conflict entered its third week. Oil prices stabilized despite US strikes on military targets at Iran’s main oil-export hub of Kharg Island over the weekend and threats to target energy infrastructure if Tehran interferes with transit through the Strait of Hormuz. Still, Treasury yields remained near recent highs as elevated energy costs fueled inflation concerns, reducing expectations that the Federal Reserve will cut interest rates. The central bank is widely expected to hold rates steady this week in what would be Chair Jerome Powell’s penultimate meeting.
