EUROPEAN FIVE-YEAR SOVEREIGN CDS RISE SHARPLY AS BOND MARKETS SELL OFF UK 5-YEAR CDS RISE 2.4 BPS TO 20.5 BPS, HIGHEST SINCE OCTOBER FRANCE 5-YEAR CDS RISE 3.8 BPS TO 31.6 BPS, HIGHEST SINCE NOVEMBER ITALY 5-YEAR CDS RISE 4.7 BPS TO 36.2 BPS, HIGHEST SINCE OCTOBER

US officials are working to avert a potential months-long shutdown of the Strait of Hormuz, acknowledging reopening remains uncertain and partly dependent on President Donald Trump’s actions. A Defense Intelligence Agency assessment said Iran could block the passage for one to six months, though officials downplayed the worst-case scenario. Military operations have degraded Iran’s capabilities but not eliminated threats, including mines and small-boat attacks. Officials said securing transit remains complex, with risks persisting even if Iran’s missile and drone capacity is further reduced.

US Treasury yields climbed Friday as hawkish central bank signals and Brent crude above $100 dampened expectations for Fed rate cuts. Two-year yields rose to 3.83%, five-year to 3.91%, down from 61 basis points of expected easing pre-Iran war to just three now. Capital Economics’ James Reilly said inflation pressures make rate cuts unlikely soon. The Fed, ECB, and BoE held rates but signaled readiness to act against inflation amid Middle East uncertainty.