Treasury Yields Surge as Oil Prices Plummet

U.S. Treasury yields have posted three consecutive gains, heading for their longest winning streak in a month. This uptick comes as oil prices ease due to market optimism about negotiations between the United States and Iran, which may lead to a resumption of tanker traffic around the Arabian Peninsula.

Brent crude oil prices have fallen sharply in recent days, from above $100 per barrel last week to around $86. According to Zhitong Finance APP, this drop in oil prices has driven U.S. Treasury yields higher as inflation expectations cool.

Meanwhile, the yield on the 10-year U.S. Treasury note has fallen for three consecutive days and extended its downward trend in pre-market trading on Tuesday, slipping 3 basis points to 4.62%. The yield spread between the 10-year Treasury and the two-year Treasury has also narrowed to its lowest level in nearly four weeks.

Market strategist Evelyn Gomes-Lechi at Mizuho International noted that this bullish trend in U.S. Treasuries with maturities of 10 years or longer suggests investors remain reluctant to fully unwind the risk premium associated with a renewed uptick in inflationary pressures.