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Treasury yields lag oil after declines as Fed week nears

Treasury auction activity and positioning ahead of the Fed announcement were cited as drivers of yields underperforming oil’s drop.

Reported · Written up by our desk · Economy

Mortgage News Daily reports that the day’s move kept a close link between oil and bond yields, but yields were less willing to follow oil’s larger drop. The outlet said this meant that, when benchmarked against oil price moves, bonds underperformed the decline in oil. It pointed to two contributors, $139 billion in Treasury auctions and “defensive positioning” ahead of Wednesday’s Fed announcement. In markets, Mortgage News Daily noted gains in mortgage-backed securities, up 5 ticks, and a decline in the 10-year Treasury yield, down 2.9 basis points to 4.654%. It added that more unrestrained trading was likely not visible until after Wednesday afternoon, with some volatility tied to war headlines but conditions still described as stronger overall.

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