US 10-Year Yield Plunges from 9-Month High

The yield on the 10-year US Treasury note dropped to 4.35% on Wednesday, 10bps below the nine-month high from Monday as a sharp drop in oil prices eased inflation concerns. The price of oil and refined product plunged after the US stated it proposed a short memorandum to Iran that would stop the ongoing war. If agreed, President Trump also agreed to facilitate the return of energy exports from the region, which have been suspended since March, and triggered a surge in inflation that drove rate traders to bet on hikes by the Federal Reserve this year. The latest round of economic data had also favored hawkish members of the FOMC, backed by multiple dissents in the committee's last decision. ADP employment figures remained robust ahead of the jobs report on Friday, while inflation measured by the ISM was at a multi-year high. Meanwhile, the Treasury signaled no change in front-loading its borrowing needs with shorter-term securities for the upcoming quarters.

The yield on the US 10-year Treasury note fell around 7bps to 4.34% on Wednesday, extending a 2bps decline in the previous session, as a sharp drop in oil prices eased inflation concerns. Oil came under pressure amid hopes that the conflict with Iran could be nearing an end. Axios reported that the White House believes it is close to reaching an agreement with Iran on a preliminary memorandum of understanding to halt the war and set the stage for more detailed nuclear negotiations, citing two US officials and other sources. In addition, the US said its offensive operations against Iran had concluded and announced a temporary pause in “Project Freedom.” The decline in oil prices helped ease fears of renewed inflationary pressures. Investors are now awaiting the Treasury’s Refunding Announcement, after estimates released on Monday showed the US Treasury expects to borrow $189 billion in the second quarter, $79 billion more than previously projected in February.

The yield on the US 10-year Treasury note declined by about 5 basis points to 4.38% on Wednesday, as rising optimism over a potential agreement between Washington and Tehran eased inflation concerns. Defense Secretary Pete Hegseth said the ceasefire established nearly a month ago remains in place, while Secretary of State Marco Rubio confirmed that offensive operations have concluded as Washington shifts its focus to securing shipping routes in the Strait of Hormuz. President Donald Trump also announced a temporary pause in a US-led effort to assist stranded vessels in exiting the strait, allowing time for possible renewed talks with Iran. Oil prices retreated, helping to temper expectations that the Federal Reserve may need to raise interest rates further to contain inflation. Market participants now turn their attention to ADP’s private payrolls report for April for signals on labor market conditions, ahead of the closely watched monthly jobs report due Friday.