Powell's statement eases fears of rate hikes, US bond prices rebound.

After the Federal Reserve chairman made a statement easing market concerns about inflation and rate hikes, the U.S. bond market saw a rebound. Powell stated that the tariff policy introduced by President Trump had only brought about a "one-time price shock," and that the Fed's ability to control supply-side shocks, such as those caused by war-induced oil price increases, was limited. Buoyed by this statement, U.S. bond prices rose and yields continued to fall. At the same time, concerns in the market about the potential drag on global economic growth from the Middle East conflict led to funds flowing back into sovereign debt markets that had previously been sold off. Large institutions including PIMCO, J.P. Morgan, and T. Rowe Price showed increased interest in bond assets. Specifically, during Powell's speech on Monday, the yield on U.S. 2 to 7-year Treasury bonds widened by at least 10 basis points. The 2-year Treasury yield, sensitive to policy changes, fell to about 3.81%, down 7 basis points from the previous Friday; the benchmark 10-year Treasury yield dropped more than 9 basis points to about 4.33%. Meanwhile, the yields on 10-year government bonds in the UK, Germany, and Japan also fell in tandem. In terms of interest rate expectations, traders have significantly reduced bets on rate hikes this year and have begun to factor in the possibility of rate cuts by the end of 2026. In recent weeks, due to soaring oil prices and growing inflation concerns, the bond market had experienced continuous selling pressure, but the market focus is now gradually shifting towards the risks of economic slowdown. Institutions generally believe that the market may be underestimating the negative impact of the Middle East conflict on the economy. Goldman Sachs predicts that the probability of a U.S. economic downturn in the next year has risen to around 30%. Institutions like PIMCO also warn that the conflict may lead to more pronounced growth slowdowns. In the energy market, the conflict continues to drive a sharp increase in oil prices. The war has now entered its second month, and the U.S. has extended the deadline for Iran to reopen the Strait of Hormuz, but there are still no signs of easing tensions. The WTI crude oil price is expected to rise by over 50% this month, with an increase of over 2% in Monday's trading, reaching about $102 per barrel. Trump stated on social media that the U.S. is engaged in "serious negotiations" with Iran, but warned that if an agreement is not reached, it could further target Iran's oil and power infrastructure.