U.S. Treasury yields fell sharply on Wednesday as hopes of an end in the two-month-long war in the Middle East sent energy prices lower.
The yield on 10-year U.S. Treasury — the benchmark for government borrowing — moved more than 6 basis points lower to 4.354%.
Shorter- and longer-dated yields also ticked lower. The yield on the 2-year Treasury note, which more closely tracks short-term Federal Reserve rate moves, was also down more than 6 basis points at 3.872%. The 30-year Treasury yield, meanwhile, dropped more than 4 basis points to 4.939%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
The slide in borrowing costs came as President Donald Trump said that "Project Freedom" — the U.S. military effort to help "guide" commercial vessels through the Strait of Hormuz chokepoint — had been paused.
Optimism was further boosted after Axios reported that the U.S. and Iran were close to agreeing on a one-page agreement to end the war. A spokesperson for Iran's foreign ministry told CNBC that Tehran is "evaluating" a 14-article peace proposal from the U.S.
Energy prices fell, with West Texas Intermediate futures plunging 7.03% to close at $95.08 per barrel. Brent crude shed 7.83% to close at $101.27 a barrel.
In a Truth Social post, the president said that "Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran."
Elsewhere, investors kept their eyes on the state of the labor market, as ADP reported that payrolls in the private sector in April beat expectations. During the month, companies added 109,000 jobs. That's an increase from the 61,000 positions that were created the month before and above the 84,000 that economists polled by Dow Jones expected.
"Some will read today's headline ADP number as a sign that hiring is now exiting its recent soft patch, but we have our doubts," said Oliver Allen, senior U.S. economist at Pantheon Macro. "The first official estimate of private payrolls typically has been higher than ADP's initial reading recently, but the gap is far from consistent. The reacceleration it implies in April might simply be noise."