US Treasury yields fell sharply on Wednesday following the announcement of a two-week ceasefire in the Middle East conflict.
yield of 10 years US Treasury The note, a benchmark for government borrowing, fell about 4 basis points to 4.301%.
Yields on short- and long-term bonds also fell as investors bought up U.S. Treasuries. yield of 2 years treasury Notes that more closely follow short-term Federal Reserve interest rate movements were down 4 basis points to 3.79%. of 30 year Treasury bill The yield fell 3 basis points to 4.891%.
One basis point is equal to 0.01%, or 1/100th of 1%, and yield and price are inversely proportional to each other.
The fall in borrowing costs came as concerns about inflationary pressures caused by five weeks of conflict eased.
Following the cessation of hostilities, energy prices quickly reversed. Under the terms of the deal, President Donald Trump will agree to halt attacks on Iranian infrastructure, while Tehran will allow ships to safely navigate the vital Strait of Hormuz waterway “in coordination with the Iranian Armed Forces,” Foreign Minister Abbas Araghchi said in a statement.
Uncertainty remains regarding passage through the Strait of Hormuz. On Wednesday, Iranian state news agency Fars announced that oil tanker traffic through the strait had been halted following Israel’s attack on Lebanon. Iranian Parliament Speaker Mohammad Berger Ghalibaf also said the US had already violated the two-week ceasefire agreement.
West Texas Intermediate Crude Oil Futures It fell more than 16% to close at $94.41 per barrel, the biggest single-day decline since April 2020. international benchmark Brent delivered in June It fell about 13% to settle at $94.75.
Traders are also weighing the possibility of a rate cut by the end of the year following the ceasefire agreement, with the probability of a rate cut jumping to more than 43% from 14% on Wednesday morning, according to CME Group’s FedWatch tool.
