Bond yields are sending a new signal about Fed rate hikes

U.S. Treasury yields are signaling a reduced market expectation for further Fed hikes after cooler inflation data eased pressure on the policy-sensitive 2-year note, which fell to 4.17% from an intraday high near 4.29%. The 10-year yield also slipped to 4.54%. The article argues that markets are increasingly pricing a Fed pause, even as renewed U.S.-Iran tensions and Brent crude’s rise above $86/bbl could reintroduce inflation risk. The move in yields also reflects a broader equity selloff, especially in chip stocks and AI-related names, with the semiconductor index near bear-market territory and major U.S. equity benchmarks set for weekly declines. Overall, the piece frames lower yields as a sign that inflation data, rather than geopolitical oil shocks, is currently dominating rate expectations.