The yield on the 10-year US Treasury note fell to 4.29% on Wednesday, marking a third consecutive session of decline as investors grew increasingly concerned about the Middle East war’s impact on economic growth. Now in its fifth week, the conflict has rattled global markets and raised fears of a simultaneous spike in inflation and slowdown in growth.
However, Federal Reserve Chair Jerome Powell earlier this week noted that longer-term inflation expectations remain well-contained, easing concerns that higher energy prices will immediately push inflation higher. This reduces the urgency for any monetary policy response, particularly as the Fed has limited tools to counter supply-driven shocks. The yield on the 10-year note climbed around 39 bps in March, reflecting the surge in oil prices amid renewed inflation concerns.
