US Treasury yields fall as Trump says US in ‘final stages’ with Iran

US Treasury yields fell sharply Wednesday after President Donald Trump said Washington was in the “final stages” of negotiations with Iran, fueling investor optimism that a possible agreement could ease pressure on global energy markets.

xYields on two- to 10-year US Treasuries dropped by around 10 basis points following Trump’s remarks, while the US Dollar Index fell 0.1%.

The market rally came as investors priced in the possibility that a US-Iran agreement could reduce risks surrounding energy supplies and ease inflation expectations.

The Strait of Hormuz, a key route for global oil and gas shipments, has effectively remained closed amid the conflict, driving energy prices higher and raising concerns that persistent inflation pressures could force the Federal Reserve to maintain tighter monetary policy for longer.

Despite Wednesday’s decline, US Treasury yields remained near recent highs.

The benchmark 10-year Treasury yield stayed above 4.5%, while the 30-year yield hovered around 5.11%, near its highest level since 2007.

Treasury futures trading volumes also increased as investors reacted to Trump’s comments, although part of the early rally later lost momentum.

Trump said Wednesday that the US was in the “final stages” with Iran, adding: “We’ll see what happens.”

He also said a deal would either be reached or Washington would “do some things that are a little bit nasty.”

Markets have repeatedly reacted positively to signs of diplomatic progress, though previous rallies faded as disruptions to global energy flows persisted.

Investors also scaled back some expectations that the Federal Reserve could raise interest rates again before the end of the year, although markets still expect the central bank’s next move to be a rate hike rather than a cut.