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Treasury yields slip as oil falls ahead of Fed decision

The 10-year yield fell 3.9 basis points to 4.602%, while U.S. crude dropped 3.7% to $79.55 a barrel.

Reported · Written up by our desk · Economy

U.S. Treasury yields fell on Tuesday as oil prices continued to ease, helping reduce expectations for future inflationary pressure ahead of the Federal Reserve's interest rate decision on Wednesday, according to Reuters. The benchmark 10-year note was down 3.9 basis points to 4.602% after hitting a one-week low of 4.588%. Reuters reported the 10-year yield was also on track for its first three-day decline in a month, with the 30-year yield down 3 basis points to 5.095%.

Oil continued retreating on hopes of a more durable resolution to the U.S.-Iran conflict. Reuters said U.S. crude fell 3.68% to $79.55 a barrel, while Brent dropped 4.23% to $84.58 per barrel after falling more than 5% to a two-week low.

BondBloxx Investment Management strategist JoAnne Bianco said lower oil reduces forward inflationary pressure and can help yields “back off.” Despite the day’s decline, Reuters noted that yields on the 10-year and 30-year notes remain poised for their biggest monthly increase since March, the first full month of the Iran war, as a prior rise in oil has supported expectations for Fed rate hikes.

Latest closeWTI crude $81.23 ▼1.7%|Brent $85.92 ▼2.8%

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