Treasury yields fall as dropping oil prices ease inflation concerns
Ten- to 30-year maturities saw yields decline to their lowest levels since September as investors moved into lower-risk assets.
US Treasury yields extended their largest monthly advance in over two years as falling oil prices reduced concerns regarding inflation and further Federal Reserve interest-rate hikes, according to Mint.
The US 10-year yield declined by as much as six basis points to fall below 4.87%, marking its lowest level since September 10. Yields for ten- to 30-year maturities also fell by about four basis points.
West Texas Intermediate futures dropped 7.4 per cent to settle near $96.50 a barrel after Washington and Tehran indicated openness to talks to resolve the Middle East energy supply conflict.
Steven Zeng, an interest-rate strategist at Deutsche Bank, said the oil price slide supports Treasury yields moving lower. He also noted that the historical negative correlation between bonds and equities appeared to have returned over the past month.
Dhiraj Narula, US rates strategist at HSBC, said shorter-term yields fell less than longer-term ones due to a steepening move following the recent decision to leave rates unchanged. This move also reflects questions regarding potential long-end Treasury supply cuts.
US officials may address these supply questions during a quarterly discussion of their borrowing strategy on Wednesday.