U.S. Treasury yields fell on Wednesday as concerns about rising inflation receded and Brent oil prices fell to levels not seen since before the start of the Iran war.
The yield on the 10-year Treasury note, a key measure of U.S. government borrowing, fell more than 8 basis points to 4.406%.
The two-year Treasury yield, which is more closely tied to the Federal Reserve’s short-term interest rate policy, fell more than 5 basis points to 4.148%. The yield on the 30-year government bond fell more than 8 basis points to 4.859%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
international benchmark brent crude oil futures Crude oil prices fell 4.33% in August to close at $73.74 per barrel, the lowest since before the start of the US-Israel-led war against Iran at the end of February.
us West Texas Intermediate Futures The August closing price was 3.92% lower at $70.34 per barrel. Earlier, U.S. crude oil prices had hit their lowest since early March.
Investors were encouraged by signs that maritime traffic through the Strait of Hormuz could begin to return to normal.
The International Maritime Organization says more than 11,000 seafarers stranded in the Persian Gulf will begin leaving the country through the Strait of Hormuz once it is safe to do so.
“We have ensured the necessary security guarantees and thoroughly verified the conditions for safe navigation to support these operations,” IMO Secretary-General Arsenio Dominguez said in a statement.
President Donald Trump also said in a post on Truth Social on Wednesday that Iran has informed the United States that it will not impose tolls, insurance premiums or fees of any kind on ships passing through the strait.
“Our core view is that the energy surge was always likely to be temporary rather than structural, and that markets overestimated the persistence of the resulting inflationary impulse,” said Ross Panfilon, chief investment officer of fixed income at Impax Asset Management.
“We continue to see scope for further declines in long-term bond yields in the near term,” he added.
A key test will be later this week, when May values for the Fed’s preferred inflation measure, the Consumer Expenditure Price Index, are released on Thursday.
Excluding volatile food and energy prices, core PCE is expected to rise starting in April, according to economists compiled by FactSet.
— CNBC’s Sam Meredith also contributed to this report.
