Castle Securities said Kevin Warsh's commitment to lowering inflation has bolstered Fed credibility, supporting US long-term Treasury yields and compressing the term premium. After last week's Fed meeting, trading in the $31 trillion US Treasury market showed long-end yields were more stable than the more policy-sensitive two-year yield, and Nohshad Shah, head of fixed-income sales, said a highly credible Fed should benefit long-end performance.

A U.S. official told NewsNation that Secretary of State Rubio spoke last Friday with Israeli Prime Minister Netanyahu and Lebanese President Aoun about consolidating a ceasefire and future negotiations. After the calls, U.S. Central Command activated a monitoring mechanism to provide policymakers with real-time battlefield information from Lebanon.

FX desks are on alert for possible Japanese intervention after reports that Japan's finance minister Katayama and US treasury secretary Bessent held an online discussion that may have touched on exchange rates. USD/JPY traded around 161.57 early Tuesday, near a 40-year low. NHK and Kyodo reported the officials may have discussed the currency. Traders say the yen remains under pressure after the Bank of Japan’s recent rate hike failed to raise borrowing costs quickly enough to curb inflation, and higher oil prices linked to the US‑Iran war add further strain. A Sumitomo Mitsui Trust Bank New York trader, Takeru Yamamoto, said Japanese authorities may seek to signal coordination with the US and that the intervention threshold is not high; he added USD/JPY could test the 162 area this week despite the underlying fundamentals.