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10-year Treasury yield slides as Iran deal drives rethink on Fed interest rate hikes

The 10-year Treasury yield dropped to **4.44-4.46%** after a U.S.-Iran peace deal reduced market bets on near-term Federal Reserve rate hikes. Traders now expect the next hike pushed back to **March 2027**, with bond prices rallying on eased inflation fears. Oil prices have also declined, adding pressure on rate expectations. The bond market remains cautious despite stock market optimism about the deal.

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What changed

Yields fell **4 basis points** from prior levels as the Iran deal reshaped Fed rate hike timelines, with traders uniformly lowering expectations for 2026 increases.

Live updates

  1. Treasury yields fall as Iran deal delays Fed rate hike expectations

    The 10-year Treasury yield dropped to **4.44-4.46%** after a U.S.-Iran peace deal reduced market bets on near-term Federal Reserve rate hikes. Traders now expect the next hike pushed back to **March 2027**, with bond prices rallying on eased inflation fears. Oil prices have also declined, adding pressure on rate expectations. The bond market remains cautious despite stock market optimism about the deal.

    What's confirmed:

    • The 10-year Treasury yield dropped to **4.441%** on Monday after a preliminary U.S.-Iran peace deal announcement.
    • Market expectations for the next Federal Reserve rate hike have shifted to **March 2027** following the deal.
    • U.S. Treasuries rallied as traders reduced bets on further Fed rate hikes, pushing yields to their lowest levels in a month.
    • Oil prices have fallen alongside Treasury yields, further supporting the case for delayed Fed tightening.
    • The bond market’s reaction to the Iran deal has been more subdued than stock market gains, reflecting lingering uncertainty about inflation.

    Still unconfirmed:

    • The Iran deal may include a **14-point understanding**, though details remain unconfirmed.
    • The Fed’s new chair, **Kevin Warsh**, may face pressure to adjust policy sooner than expected due to mixed market signals.
    • Some traders speculate this could mark the start of a broader shift in rate expectations, though others warn it may be temporary.
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