2026.05.2611:43:40UTC+00Treasury Yields Fall to Kick Off the Week

The yield on the US 10-year Treasury note fell about 6 basis points to 4.5% on Tuesday, as investors returned from the long weekend and remained cautiously optimistic that the US and Iran could still reach a near-term agreement, despite recent military strikes and ongoing mixed signals from both sides.

At the same time, market attention is firmly on the Federal Reserve’s policy outlook, with investors reassessing the path of interest rates after the recent surge in oil prices intensified inflation concerns. Traders are now assigning roughly an 80% probability to a rate hike by December, a sharp reversal from earlier expectations of two 25-basis-point cuts before tensions between the US and Iran escalated.

The upcoming PCE inflation report—the Fed’s preferred measure of price pressures—will be closely watched for further insight into the inflation trajectory and the central bank’s likely policy response.