US Treasury yields steadied on Monday during the North American session as tensions in the Middle East halted the decline in crude Oil prices, while money markets are still pricing in at least 34 basis points of Federal Reserve (Fed) tightening in 2026.
Yields hold firm as Fed tightening bets counter softer US Dollar
The US 10-year Treasury note yield, the benchmark, rises by 1 basis point to 4.38%. Negotiations between the US and Iranian teams are expected to take place in Doha, Reuters reported.
The US 2-year Treasury yield, the most sensitive to changes in monetary policy, rises nearly 2% to 4.11%. Money markets had so far priced in 34 bps of Fed tightening towards the end of the year.
Meanwhile, the US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, recoils during the day, down to 101.08, and falls 0.28% as traders seeking risk move towards riskier assets.
The 5- and 10-year breakeven rates, a market-based measure of inflation expectations, are at 2.21% and 2.20%, respectively, after peaking in mid-April at 2.72% and 2.5%, respectively.
The US economic schedule will be busy. Aside from the appearance of the new Fed Chair, Kevin Warsh, at Sintra in Portugal, the docket will feature JOLTS job openings, the ISM Manufacturing PMI, jobless claims, and the US Nonfarm Payrolls for June, which are expected to provide clues about the jobs market.
US 10-year Treasury yield chart
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