On Tuesday, U.S. Treasury yields rose, driven by heightened expectations for Federal Reserve interest rate increases amid a volatile geopolitical landscape in the Middle East. The 10-year Treasury yield reached 4.6278%, while the 2-year note rose to 4.2900%.
This increase follows President Trump's announcement of a blockade on Iranian ports, which has contributed to rising oil prices, with West Texas Intermediate futures climbing 2.84% to $80.36 a barrel. Market participants are now pricing in a 42.2% chance of a rate hike on July 29, up from 26.7% a week prior, and a 33.6% chance of another increase by April.
Investors are also awaiting Fed chair Kevin Warsh's testimony before Congress and the June inflation data, which is expected to show a decrease in annual inflation from 4.2% in May to 3.8%. Core inflation is anticipated to remain steady at 2.9%. These developments are significant as they may influence future monetary policy and market conditions