Treasuries rose sharply as oil prices tumbled over 7%, easing inflation fears and prompting bets against further Federal Reserve rate hikes. Ten- to 30-year yields fell four to six basis points, hitting their lowest since September, while the 10-year yield dropped below 4.88%. The negative correlation between bonds and equities returned, with investors shifting to safe assets amid tech sector weakness.
Lower oil prices also stabilized US stocks. Fed policymakers raised rates in September for the first time since 2023 due to inflation driven by rising energy costs. Traders still expect at least two more quarter-point hikes by end of next year, though cumulative tightening expectations have eased.
Shorter-term yields fell less than longer ones, reflecting post-FOMC steepening and uncertainty over potential long-end Treasury supply cuts. Officials may address borrowing strategy in Wednesday’s quarterly discussion. Related: Wall Street Eyes Biggest Treasury Sales Overhaul in Years.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing