Yields on U.S. Treasury bonds fell amid expectations of a deal with Iran
U.S. Treasury bonds resumed their decline following a drop triggered by falling oil prices amid expectations of a potential deal between Washington and Tehran. Yields on Treasury securities of various maturities fell to or near record lows during the session. In particular, the yield on 10-year U.S. bonds fell to approximately 4.55%, whereas just two days ago it exceeded 4.68%—the highest level since January 2025.
This was reported by Bloomberg.
Earlier, the bond market had been “slumping” due to a sharp rise in oil prices. Following the U.S. and Israeli strikes on Iran in late February, energy prices rose, which intensified fears of a new wave of inflation in the U.S. As a result, investors began to doubt that the Federal Reserve would be able to cut interest rates this year. It was precisely these expectations that weighed on the U.S. Treasury bond market.
On Thursday, May 21, the situation changed as U.S. WTI crude oil fell to about $96 per barrel, the lowest level in more than a week. Against this backdrop, U.S. bonds partially recouped their previous losses.
“Bond yields have been fluctuating this week due to the intermittent emergence and disappearance of prospects for a deal with Iran,” said Subadra Rajappa, head of U.S. research at Societe Generale Americas.
According to her, the market is reacting to signals regarding potential agreements, as U.S. Secretary of State Marco Rubio previously stated that progress has been made on this issue.
Analysts believe that the market’s future behavior will depend on how long the conflict with Iran lasts. If tensions persist, oil prices could rise again, which would exacerbate inflationary risks for the U.S.
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