Treasury yields edged lower again Thursday after a report that U.S. and Iranian negotiators agreed to extend a ceasefire drove oil prices lower, even as new U.S. data reflected persistent inflation.
The yield on the 10-year U.S. Treasury note — the main benchmark for mortgages, auto loans and credit card debt — dipped almost 3 basis points to 4.453%.
The 2-year Treasury note yield, most sensitive to short-term Federal Reserve interest rate decisions, fell nearly 1 basis point to 4.025%. The longer-dated 30-year Treasury bond yield, which typically reacts most to geopolitical risks, dropped 3 basis points to 4.98%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Oil pulled back from its highs of the day after Axios reported that U.S. and Iranian negotiators agreed to extend the ceasefire in the three-month war, and start talks on Iran's nuclear program. President Trump has yet to give the agreement his final approval, the report said.
West Texas Intermediate crude oil futures were last up 0.55% Thursday, a touch above $89 a barrel, while Brent futures traded below $94 a barrel. They were higher earlier in the day, following Iranian strikes on a U.S. military base.
At the same time, new economic data released Thursday pointed to persistent price pressures. The personal consumption expenditures price index, the Fed's preferred inflation gauge, rose 3.8% in April from the year-earlier period. And while yields pared gains after the data matched expectations, some on the Street are concerned about the continued upward pressure on inflation.
"If Washington economic officials were looking for evidence to back up claims there is no cost-of-living crisis in America, they will have to look elsewhere because PCE consumer inflation is still heating up in April as the Iran war pushes energy costs sharply higher," said Chris Rupkey, chief economist at FWDBonds.