U.S. Treasury rates fell significantly early Wednesday following the declaration of a two-week truce in the Middle Eastern conflict.
The yield on the 10-year U.S. Treasury note, which serves as the standard for government borrowing, dropped by over 10 basis points to 4.2399%.
Yields on shorter- and longer-term notes were also reduced as investors flocked to U.S. bonds. The yield on the 2-year Treasury note, closely tracking Federal Reserve rate changes, fell by 11 basis points to 3.7193% by 3:35 a.m. E.T. The yield on the 30-year Treasury note decreased by 7 basis points to 4.8482%.
One basis point is equal to 0.01%, or 1/100th of 1%, and yields and prices move in opposite directions.
The decrease in borrowing costs occurs as worries about inflationary pressures stemming from the five-week conflict diminish.
Energy prices quickly shifted direction after the ceasefire initiated. According to the agreement terms, President Donald Trump committed to ceasing attacks on Iranian infrastructure, while Tehran will permit the secure navigation of vessels through the essential Strait of Hormuz waterway “in coordination with Iran’s Armed Forces,” Foreign Minister Abbas Araghchi stated.
Brent crude, the international standard, fell below $100 a barrel in initial trading, hitting $94.49—a drop of 13.5%. U.S. West Texas Intermediate decreased by nearly 15% to $96.20 a barrel.
The minutes from the Federal Open Market Committee’s meeting in March will be published later on Wednesday, as investors readjust their expectations regarding future Fed interest rate cuts. Markets will also pay close attention to the Mortgage Bankers’ Association’s latest 30-year fixed-rate data—a crucial indicator of U.S. housing affordability—set to be released later.
Core monthly and annual inflation statistics for March will be published on Friday.
