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US-Iran Talks Stalemate Drives Treasury Yields Higher, Rate Hike Expectations Rise

Federal Reserve

Due to signs of a deadlock in the peace negotiations between the United States and Iran, U.S. Treasury prices fell, raising concerns that high energy costs will exacerbate inflation and prompt the Federal Reserve to raise interest rates. The sell-off on Monday led to a rise in yields in the $31 trillion U.S. Treasury market, with the yield on the 10-year Treasury rising by about 6 basis points to nearly 4.5%, while oil prices surged by over 7%. The yield on the two-year Treasury, which is most sensitive to expectations of Federal Reserve policy, also rose by about 6 basis points to 4.07%. Previously, Iran suspended dialogue with the U.S. through intermediaries in protest of Israel's actions. Traders have raised expectations that the Federal Reserve's next move will be an interest rate hike. The swap market indicates that traders have fully priced in a rate hike by March 2027, and they see a 50% chance of a hike as early as October

Iran suspends dialogue, US bonds decline, traders raise interest rate expectations

U.S. Treasury yields continue to rise, with the 10-year yield surpassing 4.68% and the 30-year yield rising to 5.20%. Traders expect a 43% probability of interest rate hikes within the year, and a 63% probability of hikes before July 2027. Rising inflation and a strong job market have diminished hopes for rate cuts, putting pressure on the new Federal Reserve Chairman, Christopher Waller, regarding rate hike expectations

U.S. Treasury yields continue to rise, with traders betting on a nearly 60% chance of interest rate hikes within the year

The stalled negotiations between the U.S. and Iran have raised expectations for a Federal Reserve interest rate hike. Iran has stopped exchanging information with the U.S., leading to a surge in oil prices of over 7%, and U.S. Treasury yields have risen, with the 10-year reaching 4.51%. The market is concerned that rising energy costs will spur inflation, and traders are betting that the Federal Reserve will raise interest rates as early as October

U.S. Treasury bonds fell as U.S.-China negotiations faced obstacles, raising expectations for Federal Reserve interest rate hikes

Affected by the twists and turns of the US-Iran negotiations and the tense situation in the Middle East, global financial markets have become more volatile. US Treasury bonds have been sold off, with the 10-year yield rising to nearly 4.5%; international oil prices surged by more than 5%. Geopolitical risks have raised inflation expectations, with traders betting that the probability of the Federal Reserve raising interest rates as early as October has risen to 50%, prompting the market to reassess the monetary policy path

The US-Iran negotiations encounter setbacks, US bonds are sold off, oil prices soar, and the market bets on a 50% chance of the Federal Reserve raising interest rates as early as October

As US-Iran ceasefire negotiations stall deeply, Wall Street is rapidly forming a new trading narrative—"NACHO" (Not A Chance Hormuz Opens). The market increasingly views the blockade of the Strait of Hormuz as a "normalized feature" of the macro environment. This expectation is driving the spread of a combined trading logic: going long on crude oil, shorting long-end US Treasuries, and increasing holdings in inflation-protected assets

Oil Prices and US Treasury Yields Rise in Tandem! "NACHO Trade" Gains Momentum

Since May 13, the yield on the 30-year U.S. Treasury bond has repeatedly exceeded 5%, and the 10-year yield is approaching 4.7%. Analysts believe that the rise in yields is due not only to inflation but also to market expectations of interest rate hikes and policy uncertainty. In April, the CPI rose by 3.8% year-on-year, the PPI increased by 6.0%, and high crude oil prices have intensified inflationary pressures, leading to heightened market expectations for interest rate hikes by the Federal Reserve, with inflation likely to rise further in the coming months

Behind the surge in U.S. Treasury yields: it's not just inflation, but also concerns about interest rate hikes next year

Gold stocks fell sharply. As of the time of publication, Everest Gold dropped 4.35%, trading at HKD 0.88; Lingbao Gold fell 3.44%, trading at HKD 17.86; Zijin Mining International decreased by 3.09%, trading at HKD 140.9; Zijin Mining dropped 3.05%, trading at HKD 32.38. On the news front, the global bond market sell-off continued overnight, with long-term U.S. Treasury yields reaching historically extreme levels, and the U.S. dollar index rising to its strongest since early April. Coupled with a simultaneous decline in the stock market, precious metals are under pressure. Gold briefly fell below the USD 4,500 mark. In terms of U.S. Treasuries, the 30-year Treasury yield broke through the 5% barrier, setting a new record high since 2007. Currently, market expectations for a Federal Reserve interest rate hike are continuing to heat up, with the CME's "FedWatch" tool indicating that the market believes the probability of a Federal Reserve rate hike within 2026 is close to 60%. Regarding the U.S.-Iran situation, on May 19 local time, U.S. Vice President Vance stated that significant progress has been made in U.S.-Iran negotiations, and the U.S. is also preparing a "Plan B" to restart military actions

Understanding the Market | Gold stocks lead the decline as U.S. Treasury yields and the dollar rise in tandem, with market expectations for Federal Reserve interest rate hikes continuing to heat up

Affected by the surge in U.S. Treasury yields, U.S. tech stocks faced a sell-off, with the NASDAQ index dropping nearly 1.5% at one point. The yield on the 30-year U.S. Treasury rose to 5.194%, reaching a new high since 2007, as market expectations for Federal Reserve interest rate hikes intensified, with the probability of a rate hike in 2026 approaching 60%. All three major U.S. stock indices fell collectively, with the S&P 500 and NASDAQ declining for three consecutive days, while most large tech stocks, including Google and Amazon, saw declines, and Apple rose against the trend

In the early morning, all lines fell! The Federal Reserve, suddenly a major announcement!

Citigroup warns that as inflation concerns intensify, the target for the 30-year U.S. Treasury yield is set at 5.5%. This yield has risen to 5.16%, nearing its highest level since 2007. Expectations for yield volatility are increasing, with 62% of fund managers believing that yields may exceed 6% in the coming year. Expectations for Federal Reserve interest rate hikes are also rising, with the market underestimating the risks of rate increases

US-Iran Talks Stalemate Drives Treasury Yields Higher, Rate Hike Expectations Rise

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