US BOND YIELDS NEAR YEAR HIGH AS HORMUZ CLOSURE AND INFLATION FEARS RATTLE GLOBAL MARKETS

U.S. Treasury yields rose sharply Friday, with the 10-year note approaching its highest level in nearly a year at 4.544 percent, as investors weighed the combined pressure of ongoing Strait of Hormuz disruptions, persistent inflation, and a heavy slate of economic data due throughout the day. The yield move reflects growing market concern that inflation may prove more durable than previously anticipated, according to analysts at Charles Schwab.

Markets are focused on the release of Federal Reserve meeting minutes Friday afternoon, along with the final University of Michigan Consumer Sentiment reading for May. Nvidia is scheduled to report earnings after the close, a result that analysts expect to set the tone for technology sector valuations heading into summer. AI-linked equities lifted broader indices in morning trading, with artificial intelligence infrastructure spending seen as a near-term driver of economic growth.

The continued closure of the Strait of Hormuz, through which a significant portion of global oil shipments transit, has added persistent upward pressure to energy prices since March. Analysts note that the longer the disruption continues, the greater the risk that higher energy costs become embedded in broader inflation expectations, complicating the Federal Reserve's path toward potential rate cuts later in the year.

While AI-driven investment has provided a short-term boost to equities, analysts caution that the massive wave of data center construction underpinning that growth is itself an inflationary force, adding to pressure on long-term borrowing costs. The S&P 500 remained on track for a winning week heading into Friday's session, though gains were tempered by the bond market's signal that tighter financial conditions may persist longer than markets had priced in earlier this year.