US Treasury yields declined Tuesday, extending a fifth consecutive session of gains across the curve, as falling oil prices dampened inflation concerns and reinforced speculation that the Federal Reserve has finished raising interest rates.
The contract for 10-year Treasury notes rose 0.24% to 106.30 points, pushing the underlying benchmark yield down to 4.93%, below the 5% mark for the first time since early last week. The move followed the Fed’s rate hike of 0.25 percentage points earlier this week, which lifted the target range to 3.75–4.00%.
The primary driver was a sustained decline in crude prices, largely fueled by growing optimism about a diplomatic resolution to the conflict involving Iran. Iran’s parliament speaker, Mohammed Bagher Ghalibaf, told media in Tehran that diplomacy “does not mean surrender but the conversion of field strength into political gains,” according to Iranian outlets.
Separately, Japanese news agency Kyodo reported that Iran has offered to reopen the Strait of Hormuz within seven days if the US-imposed blockade is lifted. The prospect of restored shipping access through the strategically critical waterway bolstered market hopes for lower energy prices.
US President Donald Trump is expected to hold talks with Gulf-state leaders on the margins of the UN General Assembly later Tuesday, focusing on the Iran scenario. Trump has also signaled openness to a meeting with Iranian President Massud Peseschkian during the UN general debate, though no such encounter has been confirmed.
The combination of softer oil and easing geopolitical risk has shifted market pricing away from further Fed tightening, contributing to the rally in Treasuries and the pullback in yields across key maturities.
