US-Iran Talks Show Signs of Progress, US Treasury Yields Plunge Over 7 Basis Points, Oil Price Falls Below $100 Again

News of the potential ceasefire agreement between the United States and Iran once again boosted market sentiment, causing U.S. Treasury yields to drop sharply on Wednesday. The 10-year Treasury yield fell more than 7 basis points to 4.318%, the 2-year yield also declined over 7 basis points to 3.863%, and the 30-year bond yield decreased more than 5 basis points to 4.887%.

The U.S. conveyed a 15-point peace plan through Pakistan

This rally in government bonds partially reversed the previous day’s rise in yields. On Tuesday, demand for a $69 billion Treasury auction hit its weakest since March 2025, pushing yields higher. Later, Trump stated that Washington was “negotiating” with Iran, and The New York Times reported that the U.S. had delivered a 15-point peace plan to Tehran via Pakistan, though Iran denied any negotiations over a ceasefire agreement.

“Non-hostile” ships allowed passage through the Strait of Hormuz

On Wednesday, government bonds strengthened further, driven by energy market news: reports indicated Iran agreed to allow “non-hostile” ships to pass through the strategic Strait of Hormuz, causing energy prices to plummet. International benchmark Brent crude fell below $100 per barrel, dropping about 5% to $98; U.S. WTI crude also declined about 5% to around $87 per barrel.

Market sentiment swings wildly, with ongoing concerns over inflation and interest rate hikes

The sharp fluctuations in Treasury yields and oil prices highlight ongoing worries about inflation trends and the Federal Reserve’s (Fed) rate cut prospects. Any developments in Middle East tensions influence investors’ expectations for energy prices, imported inflation, and monetary policy paths.

Currently, there remains a significant gap in statements from the U.S. and Iran, and whether negotiations will succeed remains uncertain. Market sentiment is highly sensitive to diplomatic news, and volatility is expected to remain elevated in the near term.

This article, “U.S.-Iran Negotiation Shows Signs of Progress, U.S. Treasury Yields Drop Over 7 Basis Points, Oil Prices Fall Below $100 Again,” was first published on Lian News ABMedia.