Oil Price Drop Cuts Fed Rate-Hike Wagers, Boosts Treasury Yields

Treasury yields fell across maturities on Tuesday as progress toward a diplomatic resolution of the Iran war sent oil prices lower. The decrease in oil prices curbed expectations for more than one Federal Reserve interest-rate hike in the coming year.

The yield on the two-year note reached its lowest level since July 20, dropping by four to six basis points across maturities. The benchmark 10-year yield fell to 4.62%. Treasury yields have tracked oil prices closely since the US attacked Iran in late February, helping push up inflation and bolstering the case for tighter US monetary policy.