U.S. Treasury yields were down sharply early Wednesday following the announcement of a two-week ceasefire in the Middle East conflict.
Yields on the 10-year U.S. Treasury note — the benchmark for government borrowing —plummeted more than 10 basis points to 4.2399%
Shorter- and longer-dated yields were also scythed as investors piled into U.S. bonds. The yield on the 2-year Treasury note, which more closely follows short-term Federal Reserve rate moves, was down 11 basis points at 3.7193% by 3:35 a.m. E.T. The 30-year Treasury note yield dropped 7 basis points to 4.8482%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
The slide in borrowing costs come as concerns over inflationary pressures created by the five-week conflict ease.
Energy prices rapidly reversed course following the suspension of hostilities. Under the terms of the agreement, President Donald Trump has agreed to halt attacks on Iranian infrastructure, while Tehran will allow the safe passage of ships through the critical Strait of Hormuz waterway “via coordination with Iran’s Armed Forces”, Foreign Minister Abbas Araghchi said in a statement.
Brent crude, the global benchmark, fell below $100 a barrel in early dealmaking, reaching $94.49 — a 13.5% slide. U.S. West Texas Intermediate dropped almost 15% to $96.20 a barrel.
The Federal Open Market Committee’s March meeting minutes will be released later on Wednesday, as investors recalibrate bets on further Fed interest cuts. Markets will also closely watch the Mortgage Bankers’ Association’s latest 30-year fixed rate — a key barometer of U.S. housing affordability — due out later.
Core monthly and yearly inflation data for March is due out Friday.