U.S. Treasuries fell further on Friday after falling sharply in pre-market trading, while global bond yields and oil prices also fell as traders eyed growing prospects for a resolution to the Middle East war.
of 10 year treasury The yield on notes, a key measure for mortgages, auto loans and credit card debt, fell more than 2 basis points to 4.4434%.
yield of 2 years treasury The bond, which typically moves with the Federal Reserve’s short-term interest rate decisions, fell more than 2 basis points to 4.0473%. of 30 year treasury The yield, which tends to be linked to geopolitical events, fell 1 basis point to 4.9414%.
One basis point is equal to 0.01%, or 1/100th of 1%, and yield and price are inversely proportional to each other.
On Friday, Iran’s state-run Mehr News Agency reported details of a 14-point draft memorandum of understanding between the United States and Iran. The proposed agreement includes the reopening of the Strait of Hormuz “on the basis of an Iranian agreement,” the lifting of oil sanctions and an end to all hostilities in the region, including Lebanon.
This followed President Donald Trump’s comments on Thursday that Washington made a “settlement” conditional on “the completion of the document.”
Borrowing costs fell sharply on Thursday, with the 10-year Treasury yield dropping by as much as 8 basis points, and yields on the 2-year and 30-year notes also falling firmly after President Trump halted plans for a new attack on Iran.
The prospect of a peace deal also caused energy prices to fall sharply and global bond yields to fall.
U.S. crude oil futures fell 4.5% to $83.79, while international price benchmark Brent crude fell 4.3% to $86.47.
yield 10 year UK government bond A key barometer of UK government borrowing, also known as Gilts, fell by more than eight basis points to 4.823%. yield of 10 year german federal bondThe index, which measures euro zone debt, fell by more than 5 basis points to 2.9686%.
The reversal in U.S. Treasury yields came as investors digested a stronger-than-expected rise in May’s producer price index, a key measure of wholesale inflation.
The index rose a seasonally adjusted 1.1% in the month, for an annualized rate of increase of 6.5%, according to data from the Bureau of Labor Statistics. Economists polled by Dow Jones had expected a monthly rate of 0.7%.
