US Treasury yields declined on Wednesday in tandem with falling oil prices, as the market anticipated that a sweeping Democratic victory in the midterm elections could bring the Iran war to an earlier conclusion.
After 3 PM Eastern Time, intermediate-term notes led the gains, with yields across maturities dropping 5 to 8 basis points. The 10-year Treasury yield hovered near its intraday low.
WTI crude futures plunged 8%, while Brent crude futures fell below $100 per barrel. The decline in energy prices propelled European bonds higher and provided further support for Treasuries.
The US Treasury Department released its quarterly refunding plan, with only minor adjustments to its issuance guidance, and the bond market's reaction during the morning session was relatively muted.
In late New York trading, the US 2-year Treasury yield fell 5.21 basis points to 4.5789%. The US 5-year Treasury yield dropped 7.99 basis points to 4.6824%. The US 10-year Treasury yield declined 7.82 basis points to 4.8838%. The US 30-year Treasury yield decreased 5.45 basis points to 5.2719%.
The spread between the US 2-year and 10-year Treasury yields narrowed by approximately 2.6 basis points to 30.287 basis points. The spread between the US 5-year and 30-year Treasury yields widened by about 2.5 basis points to 58.776 basis points.
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