The interest rate meeting week coincides with easing geopolitical tensions; US Treasury yields and oil prices both fall, but the suspense over rate hikes continues to rattle the market.

⑴ The Federal Reserve's policy meeting week begins amid a pause in US-Iran hostilities, with US Treasury yields generally retreating from recent highs. The 10-year yield stands at 4.647%, while the two-year yield slightly falls to 4.320%. The market is moderately correcting previous risk-off pricing ahead of policy uncertainty. ⑵ Oil prices have dropped significantly, and combined with the US Dollar Index dipping less than 0.1%, overall asset volatility reflects a partial squeezing of the geopolitical premium, yet rare two-way divergence remains in market bets on Wednesday’s interest rate decision. ⑶ Durable goods orders in June rose by only 0.3%, far below the survey estimate of 2.1%. Although the weak economic data failed to fully dispel concerns of a rate hike, institutional calculations put the implied probability of a rate increase in the futures market at around 34%, indicating high uncertainty surrounding policy direction. ⑷ The current shape of the yield curve suggests that the market is worried both about sticky inflation and about downside economic risks. If the Federal Reserve unexpectedly releases a more hawkish signal, short-term rates could once again pull the entire curve into repricing. ⑸ The main focus this week is how policymakers balance the contradiction between easing geopolitical tensions and cooling domestic demand; if the language does not effectively reassure the market, asset price corrections may become more volatile and protracted.