U.S. Treasury yields fell sharply on Wednesday as investors weighed reports that a plan to end the Middle East conflict has been put forth.
The 10-year Treasury yield — the benchmark for U.S. government borrowing — was more than 7 basis points lower at 4.318%.
The yield on the 2-year Treasury note, which are more sensitive to short-term Federal Reserve rate decisions, was more than 7 basis points lower at 3.863%. The 30-year bond yield, meanwhile, dipped by more than 5 basis points, falling to 4.887%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
The rally in U.S. Treasurys partly reversed Tuesday’s yield spike following a disappointing $69 billion bond auction, which saw the weakest demand since March 2025. The 2-year yield was more than 9 basis points higher at one point, while 10-year yields had also ticked higher on Tuesday.
Tuesday’s fall in government borrowing costs came after President Donald Trump said Washington was “in negotiations right now” with Iran over a plan to end the conflict in the Middle East.
On Wednesday, the Associated Press reported that Iran has received the U.S.’ 15-point peace plan. This comes after The New York Times reported Tuesday that the U.S. had sent a plan via Pakistan to officials in Tehran. The Islamic Republic denied it was in talks over any potential ceasefire agreement.
But Wednesday’s bond rally also came as energy prices tumbled following reports that Iran would allow ‘non-hostile’ ships through the vital Strait of Hormuz shipping channel.
Brent crude, the global benchmark, traded around $100 a barrel after sliding 4% on Wednesday. U.S. West Texas Intermediate was last seen 3% lower at about $88.
The sharp swings in market sentiment underpin sustained investor caution over the prospect of rising inflation and a halt to Fed rate cuts.
Later on Wednesday, the Mortgage Bankers Association will publish the latest average contract interest rate for 30-year fixed-rate mortgages.