The yield on the 10-year US Treasury note remained below 4.6% on Thursday after falling sharply in the previous session, as hopes for an imminent peace agreement between the US and Iran allayed inflation and rate hike fears. President Donald Trump said the US was in the final stages of negotiations with Iran, fueling hopes that the strategically important Strait of Hormuz could soon reopen. The prospect of renewed shipping flows triggered a steep decline in oil prices, helping to moderate inflationary pressures and lowering expectations that central banks will need to tighten monetary policy further. Still, minutes from the Federal Reserve’s latest policy meeting showed that most policymakers believe another rate increase this year could remain appropriate if inflation stays above the Fed’s 2% target. Markets continue to broadly expect the Fed to keep rates unchanged through the rest of the year, although traders currently see roughly a 50% chance of a rate hike in December.

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