Treasuries gained after Axios reported the US and Iran reached an agreement to extend a truce amid their three-month conflict. The potential deal sent US yields lower, mirroring declining oil prices as markets anticipated reduced geopolitical tensions that have driven recent inflation spikes. Market participants viewed the development as a potential turning point in the oil-driven inflation environment.

The three-month war has fueled an oil-driven surge in inflation, making the reported truce extension particularly significant for markets. However, the market reaction remained tempered as the report noted President Trump still needed to approve the accord, leaving investors cautious about the deal's final implementation and potential implications for energy markets.

Oil prices have been a key driver of inflation during the conflict, so any resolution would provide relief to consumers and businesses alike. The yield drop in Treasuries reflects market optimism about reduced inflationary pressures, though final approval from President Trump remains the critical next step for this geopolitical development that could reshape energy markets and inflation expectations.