Inflation concerns linger as US bond yields continue to rise.

Influenced by the hawkish remarks of the central bank and the Brent crude oil holding steady above $100 per barrel, US Treasury yields continued to rise on Friday. The two-year US bond yield rose 4 basis points to 3.83%, and the five-year yield rose 3 basis points to 3.91%. Due to the surge in oil prices, market participants have lowered their expectations for a rate cut by the Federal Reserve this year. Before the outbreak of the Iran war, swap traders priced in a market expectation of a 61 basis point rate cut by the Fed; now, this expectation has dropped to just 3 basis points. James Railey, Senior Market Economist at Capital Economics, wrote in a report, "The inflation situation is becoming more challenging for the Federal Reserve, making it less likely for them to cut rates in the short term." Affected by the Middle East situation, the Federal Reserve, the European Central Bank, and the Bank of England all kept interest rates unchanged this week, as policymakers are dealing with uncertain economic prospects. However, officials signaled to the market that they are prepared to take action to curb inflationary pressures if necessary. European Central Bank Governing Council member Joachim Nagel said on Friday that if the Iran war leads to further price pressures, the ECB might need to consider raising rates as early as in the next month. Bank of England Governor Andrew Bailey warned on Thursday that in response to the potentially more lasting effects of energy shocks on prices, policies must "respond".