(Bloomberg) — Treasuries all but erased their biggest rally of the year as investor focus shifted back to the US inflation outlook following an escalation of Middle East conflict that stoked demand for havens.
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The US 10-year yield rebounded to nearly 4.63%, within a basis point of Thursday’s closing level, after falling as much as 14 basis points to the lowest level in more than a week. Haven demand spurred by the Iran-Israel missile exchange began to ebb on indications that a broader conflict isn’t imminent. Flows included demand for options offering protection against the 10-year yield reaching 4.7% by May 24.
The market’s latest bout of volatility caps a week in which Treasury yields attained their highest levels of the year in response to persistently strong US economic data and indications from Federal Reserve officials that the three quarter-point interest-rate cuts they forecast in March have…
