US Treasury yields fell on Wednesday as Brent crude prices fell to levels not seen since the start of the war in Iran as concerns about increased inflation have eased.
The yield on the US Treasury at 10 years Note, the key benchmark for U.S. government borrowing, fell more than 9 basis points to 4.40%.
THE 2-year Treasury bill the yield, which more closely tracks the Federal Reserve’s short-term interest rate policy, lost 6 basis points to 4.139%. The most dated 30-year Treasury bond the yield fell almost 9 basis points to 4.853%.
One basis point is 0.01%, and yields and prices move in opposite directions.
International reference Brent crude futures For August, it fell 4% to around $73 per barrel and reached its lowest level since before the start of the US-Israeli war against Iran in late February.
WE West Texas Intermediate Futures for August were last seen down 4%, to around $70 per barrel. American crude had already reached its lowest level since the beginning of March.
Investors were encouraged by signs that maritime traffic in the Strait of Hormuz could begin to return to normal.
More than 11,000 sailors stranded in the Persian Gulf will start exit through the Strait of Hormuz after security guarantees have been ensured, according to the International Maritime Organization.
“We have obtained the necessary security guarantees and have 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 Truth Social article On Wednesday, Iran informed the United States that there would be no tolls, insurance fees or fees of any kind on ships passing through the strait.
“Our main view was that the energy spike was still likely to prove transitory rather than structural, and that markets had overweighted the persistence of the resulting inflationary impulse,” said Ross Pamphilon, fixed income director at Impax Asset Management.
“We continue to see further declines in long-term yields in the near term,” he added.
A key test will come later this week, when the May reading of the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, is released on Thursday.
Excluding food and energy price volatility, the core PCE is should increase starting in April, according to economists surveyed by FactSet.
— CNBC’s Sam Meredith also contributed to this report.
