2 hrs ago
U.S. Treasury Yields Ease as Oil Prices Fall
U.S. government bond yields went down on Thursday.
Yields are the returns investors receive from lending money to the government.
Oil became cheaper after reports suggested more crude was available, easing fears about inflation.
Some investors also sold investments that had risen in value to lock in profits.
The Federal Reserve raised interest rates on Wednesday and indicated that more increases might follow.
The Bank of England did not change its interest rates but remained concerned about inflation.
U.S. jobless claims fell more than economists expected.
The 10-year Treasury yield ended below 5%, after moving above that level earlier in the week.
The benchmark 10-year Treasury yield fell 6.1 basis points to 4.943%.
Oil prices dropped to a one-week low as additional Saudi crude cargoes eased supply concerns.
The Federal Reserve raised interest rates Wednesday for the first time since 2023.
The Bank of England held UK rates steady while warning about inflation.
U.S. unemployment claims unexpectedly fell by 10,000 to 196,000 last week.
- Who
- U.S. Treasury investors, the Federal Reserve, the Bank of England, and oil market participants.
- What
- U.S. Treasury yields declined as oil prices eased and investors took profits after recent yield increases.
- Where
- U.S. financial markets, with related developments in the United Kingdom and global oil markets.
- When
- Thursday, September 17, following the Federal Reserve's rate decision on Wednesday.
- Why
- Falling oil prices reduced supply-related inflation concerns, while investors reassessed the Federal Reserve's rate increase and sold positions after yields recently rose.
Case for Higher Yields
Case for Lower Yields
Inflation and interest rates
Case for Higher Yields
The Federal Reserve's rate increase and signals of further increases could keep yields elevated as investors expect tighter monetary policy.
Case for Lower Yields
Falling oil prices reduce inflation and supply concerns, which can lower the yields investors demand.
Recent market moves
Case for Higher Yields
Yields recently rose above 5% for the 10-year note amid inflation fears and higher oil prices.
Case for Lower Yields
Investors who had bet on rising yields may be taking profits, while Treasury buybacks are supporting demand for longer-dated bonds.
Economic signals
Case for Higher Yields
Unexpectedly lower unemployment claims and increased single-family homebuilding could indicate continued economic strength.
Case for Lower Yields
The decline in future homebuilding permits suggested that the housing improvement may be temporary, and uncertainty remains over the Federal Reserve's policy path.
Key facts
- 10-year Treasury yield
- Fell 6.1 basis points to 4.943%.
- 30-year Treasury yield
- Declined 5.6 basis points to 5.292%.
- 2-year Treasury yield
- Dropped 4.4 basis points to 4.683%.
- Oil prices
- Fell to a one-week low after reports of additional Saudi crude cargoes through Oman.
- Federal Reserve
- Raised interest rates for the first time since 2023.
- Bank of England
- Held UK interest rates steady while warning about inflation.
- Unemployment claims
- Dropped by 10,000 to a seasonally adjusted 196,000 for the week ended September 12.
- October rate outlook
- Traders saw an approximately 53% chance of another Federal Reserve increase.
Quotes
Tom di Galoma
Managing director at Mischler Financial Group in Stamford, Connecticut
“At first you saw rates rise, now you're seeing a little bit of a giveback of yesterday, but I don't think the market has truly figured out what's going on here”
livemint.com
“No one wants to be short the long end anymore”
livemint.com
Sources
Related news
Treasuries Rally as Oil Retreat Boosts Confidence in Fed
Thirty-Year US Treasury Yield Hits 5.34% as Oil Stokes Inflation
Global stocks rebound as yields retreat after central-bank decisions
Wall Street steadies as markets await expected Fed rate hike
Fed Rate Hike Leaves Treasury Yields Elevated Amid Inflation
Brookfield Invests $600 Million in ACME Green Molecules
Brookfield’s $600 Million Bet Targets India’s Green-Molecule Scale-Up
Rupee Recovers From Eight-Week Low on RBI, Inflows
Oil Prices Slide as Saudi Export Routes Ease Supply Fears
