05.08.202602:26:55UTC+00US 10Y Yield Falls on Hormuz Deal Prospects

The yield on the 10-year US Treasury note fell to around 4.6% on Wednesday, marking a third straight session of declines. The move came as reports of an imminent interim agreement between the US and Iran to reopen the Strait of Hormuz sent oil prices sharply lower, easing inflation worries and reducing expectations for aggressive interest rate hikes. On Tuesday, Qatar said an interim proposal had been drafted, while both Washington and Tehran indicated progress in the negotiations to reopen Hormuz. US Treasury Secretary Scott Bessent also noted that a deal could be reached as early as Tuesday or Wednesday. In response, markets scaled back the implied probability of a Federal Reserve rate hike in September to about 57%, from 67% the previous day. Investors now turn their attention to a series of US labor market releases for further guidance on the Fed’s policy path, starting with ADP’s July private payrolls report due later today.