Iran Suspends Talks, US Treasuries Fall, Traders Raise Rate Hike Expectations
$Gold - main 2608(GCmain)$$XAU/USD(XAUUSD.FOREX)$
US Treasury prices fell as peace talks between the US and Iran showed signs of stalling, fueling concerns that high energy costs would exacerbate inflation and prompt the Federal Reserve to raise interest rates. Monday's sell-off led to a rise in yields in the $31 trillion US Treasury market, with the 10-year Treasury yield rising by about 6 basis points to nearly 4.5%, while oil prices rose by more than 7%. The two-year Treasury yield, most sensitive to Fed policy expectations, also rose by about 6 basis points to 4.07%.
This followed Iran's suspension of talks with the US through intermediaries in protest against Israel's actions. Traders raised their expectations that the Fed's next move would be a rate hike. Swap markets show that traders have fully priced in a rate hike as early as March 2027 and believe there is a 50% probability of a rate hike as early as October. This is also a major reason for the decline in gold prices! Wide-range consolidation may continue!
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