Finance

A historic selloff in the bond market paused following reports that U.S. and Iranian negotiators are actively discussing a phased deal to reopen the Strait of Hormuz. The 10-year U.S. Treasury yield backed off slightly from intraday highs to end at 5.18%, though it remains pinned near levels not seen since 2007 amid lingering long-term inflation concerns.

Under the leadership of the Federal Open Market Committee, the central bank recently executed a 25-basis-point increase, raising the federal funds target range to 3.75%–4.00%. The updated dot plot projections signal a higher-for-longer regime with a median policy rate projection hovering around 4.125% for 2026, as officials focus heavily on steering sticky inflation back toward its 2% target.

Recent consumer sentiment figures from the University of Michigan edged slightly higher than initial expectations, indicating a fundamentally resilient domestic economy. However, analysts caution that persistent inflation and elevated borrowing costs, including mortgage rates approaching 7.5%, could act as ongoing headwinds for retail and housing demand.