Bond Market Focus Shifts to Inflation as Fed Rate Cuts Delayed

Inflation data released for March indicated a consumer price jump, the most significant monthly increase since 2022, pushing 10-year Treasury yields above 4.3%. This shift in focus arises amid an unstable ceasefire between the US and Iran, raising concerns about higher energy costs contributing to inflationary pressures. As a result, traders have postponed expectations for a Federal Reserve rate cut until mid-2027, shifting from two potential cuts earlier this year. The labor market remains stable with a March unemployment rate of 4.3%, further complicating the prospects for easing monetary policy.