Oil prices cooled overnight, U.S. Treasury yields declined, and the Middle East stalemate suppressed long-term bond purchases

⑴ On Tuesday, U.S. Treasury yields generally declined, affected by a renewed ceasefire in the Iran conflict and a slight pullback in crude oil prices. The benchmark 10-year U.S. Treasury yield slipped by less than 1 basis point to 4.617% at the close, after hitting a 15-month high of 4.659% on Monday.⑵ The 2-year U.S. Treasury yield, which typically tracks Federal Reserve rate expectations, fell 1.2 basis points to 4.078% at the close, after reaching a 14-month high of 4.105% earlier on Monday.⑶ Vail Hartman, U.S. rate strategist at BMO Capital Markets, stated that investors are unwilling to increase duration risk before the situation in the Middle East becomes clearer, and said he would not be surprised if a wave of buying only emerges after further sell-offs and new highs in yields.⑷ From a trading sentiment perspective, data from last week showed that rising energy prices are accelerating U.S. inflation. The market is concerned that even if the war ends in the short term, it may not be enough to pull energy prices down. This has caused the 30-year U.S. Treasury yield to continue facing upward pressure after breaking a one-year high on Monday. The upcoming 20-year U.S. Treasury auction by the Treasury Department on Wednesday will be a key indicator of investor demand.