U.S. Treasury yields fell on Wednesday as Brent crude prices fell to levels not seen since before the Iran war began, and investors await key inflation data due to be released Thursday.
The yield on the 10-year U.S. Treasury note, the key benchmark for U.S. government borrowing, fell 1 basis point to 4.483%.
The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, was broadly flat at 4.199%. The longer-dated 30-year Treasury bond yield fell over 1 basis point to 4.924%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Brent crude prices fell as concerns over potential supply disruptions eased.
International benchmark Brent crude futures for August fell 1.7% to $75.79 per barrel, notching its lowest level since Feb. 27, a day before the start of the U.S. and Israeli-led war against Iran.
U.S. West Texas Intermediate futures for August were last seen 1.7% lower at $71.98 per barrel.
Investors were also encouraged by signs that maritime traffic through the Strait of Hormuz could begin returning to normal.
More than 11,000 seafarers stranded in the Persian Gulf will begin exiting through the Strait of Hormuz after safety guarantees were secured, according to the International Maritime Organization.
“We have secured the necessary safety guarantees and have thoroughly verified the conditions for safe navigation to support these operations,” IMO Secretary-General Arsenio Dominguez said in a statement.
A key test for Treasuries comes later this week, when May’s reading on the personal consumption expenditures price index, the Fed’s preferred inflation gauge, is released Thursday.
Excluding volatile food and energy prices, core PCE is expected to increase from April, according to economists polled by FactSet.
— CNBC’s Sam Meredith also contributed to this report.
