Short-dated U.S. Treasury yields fell on Friday, tracking lower oil prices, after crude shipments through the Strait of Hormuz rose to their highest level since the U.S.-Israeli war with Iran began, fueling hopes that the worst of the recent inflation shock may be passing.
Optimism is growing that easing energy prices, as the peace agreement takes hold, will feed through to lower inflation in the coming months - even as price pressures continue to run well above the Federal Reserve's 2% annual target. Traders are also weighing the odds of a Fed rate hike after nine of the 18 policymakers who submitted projections in the "dot plot" at the June meeting indicated they expect at least one rate increase in 2026.
