The 10-year Treasury futures (TNOTE) tumbled 0.6% to their lowest level since April 2025 as investors recalibrate the monetary outlook. Markets are aggressively repricing for a more hawkish Fed, fueled by accelerating inflation and the diplomatic stalemate following the Trump-Xi summit.
TNOTE contract dipped below all three exponential moving averages (EMA100, EMA30, EMA10), enforcing the bearish momentum as RSI is still trading above the key 30 level. Source: xStation5
Yields Hit Multi-Year Highs
The 30-year Treasury yield surged to 5.117%, its highest level since May 2025, as markets aggressively repriced risk to inflation. This spike serves as a "baptism by fire" for newly confirmed Fed Chair Kevin Warsh, who must now navigate policy as long-end rates increasingly take control of financial conditions.
The record highs on US bond yields are outpacing similar trends in other countries, reigniting dollar's strength after the Trump-Xi summit. Source: XTB Research.
Hot Inflationary Data
A string of "messy" reports—including 3.8% CPI, a 6% PPI annual rate, and the largest import price jump since 2022—confirms that Middle East tensions are filtering through to wholesale and consumer costs. This data makes President Trump’s calls for rate cuts increasingly difficult for the Fed to justify.
CPI is already far away from Fed’s yearly inflation (PCE) projection (2,7%). Source: XTB Research
Failed Diplomatic Momentum
Energy prices climbed again (WTI over $104) after the Trump-Xi summit concluded without a concrete breakthrough for the Iran conflict. Investors are "pricing in the pain" of a prolonged blockade, viewing the lack of diplomatic progress as a direct catalyst for sustained high energy and transport costs.
OIL.WTI extends above the 10-day exponential moving average (EMA10, yellow). Source: xStation5
Global Fiscal Pressure
The sell-off isn't limited to the U.S.; yields on German Bunds, UK Gilts, and Japanese bonds also spiked. Domestically, the U.S. fiscal situation is worsening, with interest payments on the national debt now the second-largest government expenditure after Social Security, further unsettling bondholders.
The worldwide worries on bond markets, though symmetric, fuel the dollar as investors’ preferred safe haven, causing a major weakness in other G10 currencies, who have been recovering against USD on April’s Iran war optimism. Source: XTB Reseach
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