WASHINGTON: U.S. Treasury yields on Wednesday morning edged lower amid continued hopes that Washington and Tehran were moving toward an agreement after nearly three months of war.
The U.S. Treasury is due to hold an auction of 5-year notes in the afternoon while investors await Thursday's releases of key economic data on inflation, durable goods and first-quarter economic growth. Several members of the Fed's policy setting committee were due to speak later Wednesday.
"We're about as unchanged as one can imagine on a day with no real economic data to speak of," said Guy LeBas, chief fixed income strategist at Janney. "The timeline for whatever's going on in Iran to resolve is unknowable but probably a more useful measure of the inflation outlook than the economic data this week."
U.S. and Iranian negotiators have been meeting in Doha to discuss a potential end to the three-month war that has constrained the global oil market, lifting fuel costs and inflation around the world. U.S. Secretary of State Marco Rubio said on Tuesday reaching an agreement could take "a couple of days."
South Korea's Foreign Ministry said Wednesday that an Iranian anti-ship missile was likely involved in an attack on a vessel in the Strait of Hormuz earlier this month. However Tehran denied any involvement. The yield on the benchmark U.S. 10-year Treasury note was last down 2.8 basis points to 4.463%.
The yield on the 30-year bond had also fallen 2.1 basis points to 5.004%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 43.2 basis points.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, dipped 2.1 basis points to 4.029%. The 10-year TIPS breakeven rate was last at 2.405%, indicating the market sees inflation averaging about 2.4% a year for the next decade. - Reuters
