U.S. Treasury Yields Fall on Trump Iran Deal
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- U.S. Treasury yields fell as the 10‑year note dropped over 3 basis points to 4.447%, the 2‑year note slipped 4 basis points to 4.045%, and the 30‑year bond fell 3 basis points to 4.942%.
- Trump announced on social media that a deal with Iran was "now complete," and said he authorized reopening the Strait of Hormuz, which helped oil prices tumble and sent U.S. crude down 5%.
- Shehbaz Sharif said an official signing ceremony for the Iran agreement would be held on Friday in Switzerland.
- Israel and Hezbollah exchanged fire in Lebanon, adding pressure on the fragile U.S.–Iran ceasefire that underlies the market’s reaction.
- Investors are eyeing upcoming housing and retail sales data and a Federal Reserve policy meeting, with CME FedWatch futures showing a greater than 98% chance that rates will stay unchanged.
- Michael Landsberg noted that despite recent inflation upticks, the Fed’s meeting is expected to be a "snoozer," implying no immediate policy shift.
Why it matters: The yield decline lowers borrowing costs for the U.S. government and signals that investors see less pressure for Fed tightening, benefitting borrowers while reducing upside for banks that profit from higher rates and could dampen demand for Treasury‑linked assets as well as limit the Fed’s policy flexibility.
