Treasury yields fall on Iran peace deal prospects despite U.S. strikes
Investors work on the floor of the New York Stock Exchange (NYSE) on December 02, 2025 in New York City.
Spencer Platt | Getty Images News | Getty Images
Treasury yields fell on Wednesday as investors’ optimism about a possible solution to the war in Iran remained unabated amid pressure on the fragile ceasefire between Washington and Tehran.
The yield on the 10-year U.S. Treasury note, the main benchmark for U.S. government borrowing, fell more than 2 basis points to 4.465%.
The yield on the 2-year Treasury note, which more closely tracks short-term Federal Reserve interest rate policy, also fell more than 2 basis points to 4.022%. The yield on the longer-dated 30-year Treasury note fell 2 basis points to 5.005%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
US forces carried out strikes in southern Iran early Tuesday that the Pentagon described as “self-defense”; targeted missile launch sites and Iranian ships allegedly attempting to plant mines; whereas Washington insisted that it was still imposing restrictions within the framework of an ongoing ceasefire.
In response, Iran’s foreign ministry accused the United States of “gross violations” of the ceasefire terms.
But global government bond markets generally recovered on Wednesday. As investors’ concerns about domestic political developments began to ease in the UK, the relief rally that started on Friday continued.
British gilt yields have soared to decades-high levels in recent weeks after the ruling Labor Party’s disastrous series of local election results across the country put Prime Minister Keir Starmer’s premiership under pressure.
Looking ahead, investors will be watching a host of economic data released later this week, including the April reading of the personal consumption expenditures price index, the Fed’s preferred measure of inflation.
Economists participating in the Dow Jones survey expect an increase of 0.5 percent compared to March and a 3.8 percent increase in annual PCE.
US consumer confidence fell in May due to inflationary effects from the Middle East conflict”condensed“According to the Conference Board.
