US Treasury Yields Rise on Revival of Hopes for US-Iran Nuclear Agreement Progress

Treasury Yields Plummet as Investors Hope for Deal with Iran

Treasuries surged on Wednesday as investors expressed optimism that the US and Iran were working towards a deal that could ease a rise in global energy prices, which has fueled fears of inflation. The rally pushed yields lower across maturities, with benchmark 10-year yields declining 10 basis points to 4.57%. This move comes after a White House pool report stated that US President Donald Trump said the US was in the "final stages" with Iran.

The relief provided by the possibility of a US-Iran agreement helped alleviate some of the selling pressure in the $31 trillion Treasuries market, which has been declining since late February. Investors were also drawn to yield levels that reached multiyear highs this week, driven by inflation concerns tied to the war-driven rise in energy prices. Even after Wednesday's moves, yields on 10-year Treasuries remain near their highest levels in about a year, with the 30-year rate not far off from its highest since 2007.

| Comparison of 10-Year Treasury Yields | | --- | --- | | Current Yield | 4.57% | | Highest Yield in the Past Year | 4.70% | | Previous Highest Yield | 3.93% (January 2023) |

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Trump's comments on Wednesday also hinted at a potential deal, stating that "we'll see what happens" with Iran, and that a deal will be made or "we're going to do some things that are a little bit nasty, but hopefully that won't happen." The semi-official Tasnim news agency reported, citing a source close to the country's negotiating team, that Iran is reviewing the US's new draft in response to Tehran's 14-point proposal and has yet to give a response.

The rally also trimmed the yield in an auction of 20-year Treasury bonds, which was awarded at 5.122%. This is still the second-highest result since the US government resumed selling 20-year bonds in 2020. Traders have eased some of their bets on the Federal Reserve raising interest rates by the end of the year, but still anticipate that the central bank's next move will be a hike, in contrast to the multiple cuts seen before the US attacked Iran in late February.