Yield curve steepens slightly with April FOMC meeting in focus. Treasury yields grinded higher today as markets prepare for a busy week that includes Wednesday’s FOMC meeting decision and ECB, BOJ, BOE, and BOC policy meetings, megacap earnings reports, and further developments in Iran. The 2-year yield closed 2 bps higher at 3.80%, while the 10-year yield closed 4 bps higher at 4.34%. Meanwhile, the S&P 500 and NASDAQ closed 0.12% and 0.20% higher, respectively. Brent crude futures are now trading around $108 per barrel, up from $105.33 on Friday’s close.
White House reviewing latest Iran proposal. White House Press Secretary Karoline Leavitt said that President Donald Trump called national security officials earlier today to discuss Iran’s latest peace proposal. She shared, “His red lines with respect to Iran have been made very, very clear.” Leavitt’s comments come following reports that Iran proposed a temporary deal where the Strait of Hormuz is reopened in exchange for the US Navy ending its blockade. The proposal does not address more complex issues, such as Iran’s nuclear program, which Trump has remained firm should end. According to state media, Iranian Foreign Minister Abbas Araghchi said that the conflict could end if the US removes its naval blockade, agrees to a new framework for vessel traffic in the Strait of Hormuz, and ensures no future military action.
Fed expected to hold rates as Powell’s term comes to an end. The April FOMC meeting kicks off tomorrow, where the Fed is expected to keep its policy rate steady at 3.50%–3.75% on Wednesday. With the decision itself nearly a foregone conclusion, all eyes are on Powell’s post-meeting remarks for signals about 2026 outlook and an updated assessment of the Iran conflict. Inflation concerns remain top of mind with oil benchmarks up ~50% since the start of the Iran war, though Fed Funds futures still have a rate cut priced in as more likely this year (36%). This FOMC meeting is also expected to be Chair Powell’s last after the DOJ dropped its investigation into Powell and the Fed last Friday, clearing the way for nominee Kevin Warsh’s confirmation. Powell had said he would remain as Chair until his successor is confirmed, though it is unclear whether he will step down from his position as governor, as his term runs through 2028.
