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Bond yields stay higher despite oil reversing

The selloff linked to oil appears weaker after crude moved back to unchanged, while yields remained almost 5 bps higher day over day, with no clear new driver.

Reported · Written up by our desk · Inflation

Over the past six months, bonds have kept selling off, and some traders previously pointed to a perceived link between rate spikes and moves in oil or diesel prices. Mortgage News Daily notes that while bonds may still benefit if oil falls persistently, the broader connection has become increasingly harder to see.

In the most recent session, yields largely tracked oil higher, but when oil reversed and moved back to unchanged, bond yields did not unwind. According to Mortgage News Daily, yields were still almost 5 bps higher on the day.

The outlet said there was no specific new development clearly driving the continued yield strength, though it flagged Dallas Fed data as potentially having a small role and also cited typical month or quarter end trading effects that can influence positioning. It added that these factors could not be confirmed.

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