US Treasury Yields Drop as Trump Signals Iran Talks in 'Final Stages'

(MENAFN) U.S. Treasury yields slid sharply Wednesday after President Donald Trump declared that Washington was in the "final stages" of negotiations with Iran, lifting investor sentiment on hopes that a breakthrough could relieve mounting strain on global energy markets.

Yields on two- to 10-year U.S. Treasuries shed roughly 10 basis points in the wake of Trump's remarks, while the U.S. Dollar Index dipped 0.1%. The broad-based rally reflected growing market conviction that a U.S.-Iran accord could blunt risks to energy supply chains and temper inflation expectations that have kept traders on edge.

At the heart of those concerns lies the Strait of Hormuz — a critical artery for global oil and gas transit that has remained effectively shuttered throughout the ongoing conflict, propelling energy prices upward and stoking fears that stubbornly elevated inflation could compel the Federal Reserve to hold monetary policy tighter for longer.

Even with Wednesday's pullback, yields remained uncomfortably close to recent peaks. The benchmark 10-year Treasury yield held above 4.5%, while the 30-year yield lingered near 5.11% — territory not seen since 2007. Treasury futures volumes climbed as traders responded to Trump's comments, though the initial burst of momentum faded as the session wore on.

Trump, speaking Wednesday, repeated his assertion that a deal with Iran was within reach, though he added a pointed caveat: "We'll see what happens." He also warned that if an agreement failed to materialize, Washington would "do some things that are a little bit nasty."

Markets have repeatedly surged on diplomatic signals in recent weeks, only to give back gains as disruptions to energy flows showed few signs of abating. Wednesday's session followed the same pattern, with early enthusiasm eventually tempered by persistent uncertainty.

Traders also dialed back — though did not fully abandon — bets that the Federal Reserve could move to raise interest rates again before year's end. Market pricing still skews toward the central bank's next action being a hike rather than a cut.

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