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2026-05-29 21:56:13
[US-Iran Agreement Hopes to Drive US Treasury Yields Down for Fourth Consecutive Day; Bowman Warns Energy Shock Could Lead to Policy Shift] ⑴ US Treasury yields fell for the fourth consecutive trading day on Friday, as reports this week of progress in efforts to reach a ceasefire between the US and Iran boosted market optimism. The 10-year yield fell 0.8 basis points to 4.447%, and the 30-year yield fell 0.4 basis points to 4.981%. ⑵ Federal Reserve Vice Chairman Bowman said on Friday that it was too early to judge the economic impact of the Middle East war, but a prolonged energy shock could require central banks to change their monetary policy stance. Commerce Department data showed that the Fed's preferred inflation gauge hit a three-year high last month. ⑶ Institutional strategists pointed out that the fragile ceasefire since last month has eased upward pressure on oil prices and inflation expectations, helping to push US Treasury yields lower. However, oil prices may not end their rally simply because an agreement has been reached, as has happened before. (4) The yield on two-year U.S. Treasury bonds fell 1.1 basis points to 4.014%, and the spread between two-year and ten-year yields was positive 43.1 basis points. The breakeven inflation rate for five-year bonds was 2.529%, and for ten-year bonds it was 2.391%, indicating that the market expects inflation to average about 2.4% per year over the next ten years.
