Treasuries rose as oil prices retreated from recent highs, lowering yields across maturities by three to six basis points. The rally followed a sharp drop in crude oil futures, which had surged above $110 per barrel earlier in the session. Traders reduced bets on Federal Reserve interest-rate hikes as inflation concerns eased.
The market recovered from Monday’s losses, when tech stocks rebounded from a slide that boosted demand for safe-haven assets. Semiconductor shares stabilized after early declines. Izaac Brook of RBC Capital Markets noted that the AI risk-off trade from last week continues to influence rates markets, with falling oil prices adding downward pressure on yields.
The 10-year Treasury yield fell to near 5.12%, then dropped further as oil erased gains. Oil volatility stemmed from unconfirmed reports of a Qatar-Pakistan proposal to revive Iran war negotiations. Separately, US economic data showed weakness: September housing starts fell 5.2% to 1.22 million, missing estimates, and pending home sales hit a record low.
Padhraic Garvey of ING Groep NV called the data broadly bond-bullish.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing