U.S. Treasury yields pulled back on Wednesday — with the 30-year yield coming off its highest levels since before the global financial crisis — as oil prices dropped.
The longer-dated 30-year Treasury bond yield dropped more than 6 basis points at 5.116%. That comes a day after the yield briefly advanced to 5.197%, its highest level since July 2007.
The 10-year Treasury yield — the main benchmark for mortgages, auto loans and credit card debt — tumbled more than 9 basis points to 4.576%. During Tuesday's session, it reached its highest level since January 2025 at 4.687%.
Yields on the 2-year Treasury note, which are more sensitive to calls on short-term Federal Reserve interest rate moves, slipped by more than 7 basis points to 4.047%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
Yields spiked in Tuesday's session amid escalating concerns that a reacceleration of inflation tied to the Iran War could push the Federal Reserve to raise interest rates. HSBC strategists in a note Tuesday described U.S. Treasurys as entering a "danger zone."
But yields followed oil prices lower on Wednesday after President Donald Trump told reporters that the administration was in the "final stages" of negotiations with Iran, according to a pool report. Brent crude, the international benchmark, dropped 5.63% to close at $105.02 per barrel in Wednesday's session.
Minutes from the April 27-28 Federal Open Market Committee meeting revealed that a majority of officials anticipated interest rate hikes if the Iran war continued to intensify inflation. The Fed kept the federal funds rate unchanged at between 3.5% and 3.75%, but the decision drew the biggest dissension within the FOMC in more than 30 years, with the rate-setting committee split 8-4.
"The longer the supply disruption lasts, the more that investors may start to price this in as more than just a very, very short term disruption," said Bill Merz, head of capital markets research at U.S. Bank Asset Management. "We need to take day to day moves with a grain of salt, but we can see that the relationship between oil prices and long term bond yields has become an increasingly important one for markets."