The 10-year Treasury yield initially moved higher before pulling back on Monday as oil prices at first moved past $100 a barrel, then later declined after President Donald Trump told a CBS News reporter that the Iran war could soon be over.
The benchmark 10-year Treasury yield was fell more than 2 basis points to 4.109%, and the 30-year Treasury bond fell more than 3 basis points to yield 4.721%. The 2-year Treasury note yield was little changed at 3.557%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
“I think the war is very complete, pretty much,” Trump said, according to a post on X from CBS News senior White House correspondent Weijia Jiang. “They have no navy, no communications, they’ve got no Air Force.”
After those comments were shared, oil prices moved lower in extended trading. West Texas Intermediate crude, which had reached as high as $119.48 in overnight trading, was last at almost $87 per barrel, and global benchmark Brent was at $91 per barrel. The two had settled higher in the regular session.
The earlier rise in oil prices in the wake of the Iran war has sparked concerns about increasing energy costs translating into as more widespread spike in inflation, with some even forecasting $100-a-barrel could lead to a global recession.
“There’s been a bit of disbelief in the market,” Warren Pies, co-founder and strategist at 3Fourteen Research, said on CNBC’s “Money Movers,” noting that the market is currently worried about inflation and the Federal Reserve’s interest rate outlook. “It’s probably rational, but everything is basically priced for a quick pivot here, and that includes the bond market.”
The surge in oil prices came after Iraq, Kuwait and the United Arab Emirates slashed oil production following the effective closure of the Strait of Hormuz due to the war that began Feb. 28.
Group of Seven energy ministers will meet virtually early Tuesday to discuss a possible release of oil reserves to combat the supply disruption.
If there’s no response and millions of barrels a day are essentially unaccounted for, oil prices will need to “go to a level that starts to kill demand and ration that, and that’s recessionary,” Pies added. “I think the first tell that we’re getting to that point in the economy will be [Treasury] yields starting to come down.”
Less immediately, investors are looking ahead to a busy week of economic data, including February inflation data on Wednesday, followed by the January personal consumption expenditures index and JOLTs job opening figures on Friday.
Federal Reserve officials are in a pre-meeting blackout period ahead of their two-day meeting to decide on interest rate policy, set for March 17-18.
— CNBC’s Eamon Javers and Spencer Kimball contributed to this report
Correction: An earlier version of this story misstated which nations have recently cut their oil output. The countries are Iraq, Kuwait and the United Arab Emirates.
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