U.S. Treasury yields fell sharply on Wednesday as investors weighed reports that a plan to end the Middle East conflict was on the horizon.
of 10 year government bond yield The interest rate, the benchmark for U.S. government borrowing, fell more than 5 basis points in early trading to 4.3361% by 5:40 a.m. ET.
yield 2 years treasury Notes, which are more sensitive to near-term Federal Reserve interest rate decisions, were about 6 basis points lower at 3.8730%. of 30 year bond yieldMeanwhile, it declined by 4 basis points to 4.8999%.
One basis point is equal to 0.01%, or 1/100th of 1%, and yield and price are inversely proportional to each other.
The rise in U.S. Treasuries partially reversed a spike in yields on Tuesday after a disappointing $69 billion Treasury auction, which saw the weakest demand since March 2025. The two-year Treasury yield rose more than 9 basis points at one point on Tuesday, and the 10-year Treasury yield also rose.
The fall in government borrowing costs on Tuesday came after US President Donald Trump said he was “currently negotiating” with Iran over a plan to end the conflict in the Middle East. On Tuesday, the New York Times reported that the United States had sent a 15-point plan for a peace agreement to Tehran officials via Pakistan. The Islamic Republic denied it was in talks about a possible ceasefire agreement.
But Wednesday’s rise in bonds also came as energy prices fell following reports that Iran would allow “non-hostile” ships through the vital Strait of Hormuz.
Brent crude oil, the world benchmark, fell below $100 a barrel and fell 6.1% to $98.17 early Wednesday. US West Texas Intermediate was last down 5.7% at $87.07.
The sharp swings in market sentiment confirm that investors remain wary of rising inflation and the prospect of the Fed pausing interest rate cuts.
Late Wednesday, the Mortgage Bankers Association will release the latest average contract interest rates for 30-year fixed-rate mortgages.
