U.S. President Donald Trump shares hands with Kevin Warsh (left) as they arrive at Warsh’s inauguration ceremony as the new Chairman of the Federal Reserve in the East Room of the White House May 22, 2026 in Washington, DC.
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U.S. Treasury yields fell Tuesday at the start of the Federal Reserve’s two-day policy meeting, and expectations for inflation and rising interest rates continued to ease.
The yield on the US Treasury at 10 years rating – the key benchmark for U.S. government borrowing – fell more than 4 basis points to 4.422%.
THE 2-year Treasury bill the yield, which more closely tracks the Federal Reserve’s short-term interest rate policy, was more than a basis point lower at 4.045%. The most dated 30-year Treasury bond the yield fell more than 4 basis points to 4.925%.
One basis point is 0.01%, and yields and prices move in opposite directions.
Treasury yields fell after a interim peace agreement between Washington and Tehran was announced on Sunday, paving the way for an extension of the ceasefire between the United States and Iran by 60 days and the reopening of the Strait of Hormuz to all navigation.
Arriving at the G7 meeting, President Donald Trump said the peace framework with Iran had been signed, adding that the Strait of Hormuz would be “fully reopened” on Friday, without Iranian tolls. Trump said a formal signing ceremony would take place Friday in Geneva.
Elsewhere, investors are watching the Federal Reserve’s two-day policy meeting that begins Tuesday, the first to be led by new Chairman Kevin Warsh. The central bank is expected to maintain its policy rate at 3.50% to 3.75%, according to the implied prices used in the report. CME’s FedWatch toolwhile traders lowered their expectations for rate hikes later this year.
“A lasting solution to the Middle East crisis would ease a policy dilemma for major central banks, which are under pressure to raise rates to avoid the inflationary impact of rising energy prices,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“As a wide range of central banks hold policy meetings this week, the Fed will likely set the tone for markets.”
Economic data on housing and retail sales for May are also expected to be released on Wednesday.
— CNBC’s Hugh Leask also contributed to this report.
