of 10 year treasury Yields initially rose as oil prices initially topped $100 a barrel, but then fell after President Donald Trump told a CBS News reporter that the Iran war could soon end.
The benchmark 10-year government bond yield fell more than 2 basis points to 4.109%, and the 30-year government bond yield fell more than 3 basis points to 4.721%. The two-year government bond yield was almost unchanged at 3.557%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
“I think the war is pretty much over,” Trump said, according to a post on X by CBS News senior White House correspondent Weijia Jiang. “They have no navy, no communications, no air force.”
Oil prices fell in after-hours trading after those comments were shared. West Texas Intermediate crude rose to $119.48 in overnight trading, but last traded at nearly $87 per barrel, while global benchmark Brent crude was at $91 per barrel. Both finished in the top positions in the regular session.
The early rise in oil prices after the Iran war has raised concerns that rising energy costs will lead to a broader inflation spike, with some even predicting that $100 a barrel could lead to a global recession.
“There’s a little bit of distrust in the market,” Warren Pais, co-founder and strategist at ThreeFourteen Research, said on CNBC’s “Money Movers,” noting that markets are currently concerned about inflation and the Federal Reserve’s outlook for interest rates. “That’s probably reasonable, but basically everything is pricing in a quick turnaround here, and that includes the bond market.”
The jump in oil prices comes as Iraq, Kuwait and the United Arab Emirates cut oil production following the de facto closure of the Strait of Hormuz due to the war that began on February 28.
Energy ministers from the Group of Seven (G7) countries are scheduled to meet virtually early on Tuesday to discuss the possibility of releasing oil reserves to counter supply disruptions.
If there is no response and millions of barrels per day essentially go unaccounted for, oil prices “need to rise to a level where you start killing demand and rationing, and that’s a recession,” Pais added. “I think the first indication that the economy is getting to that point is when (treasury bond) yields start to come down.”
Investors are looking forward to a busy week with economic data released, albeit not immediately, including February inflation data on Wednesday and January personal consumption expenditures and JOLT job numbers on Friday.
Fed officials are in a pre-meeting blackout period, with a two-day meeting to decide interest rate policy scheduled for March 17-18.
—CNBC’s Eamon Javers and Spencer Kimball contributed to this report
Correction: An earlier version of this article incorrectly stated which countries had recently reduced oil production. The target countries are Iraq, Kuwait, and the United Arab Emirates.
