U.S. Treasury bonds closed lower on Friday, erasing earlier gains driven by optimism over a potential U.S.-Iran peace agreement, after President Trump stated Iran "better be careful." However, bonds pared some losses from their session lows following remarks from Iranian Foreign Minister Mohammad Javad Zarif that a memorandum of understanding between the two nations had "never been this close."
Shortly after 3 p.m. New York time, Treasury yields were up across the curve by 2 to 3 basis points, with spreads largely holding within 1 basis point of Thursday's closing levels. The yield on the benchmark 10-year U.S. Treasury note settled around 4.485%.
In early trading, Treasuries saw strong buying interest fueled by optimism surrounding the potential peace deal. This sentiment was bolstered by an Axios reporter's post on X, citing President Trump's belief that an agreement with Iran could be signed this weekend or Monday, alongside positive signals from the Iranian foreign minister.
As crude oil prices fluctuated near their session lows, Treasury futures retreated from their intraday highs. In late trading, WTI crude futures were down approximately 3.5%, contributing to continued pressure that kept Treasuries trading near their daily lows.
As of 4:29 p.m. ET, the 2-year Treasury yield was at 4.0851%.
The 5-year Treasury yield was at 4.211%.
The 10-year Treasury yield was at 4.4809%.
The 30-year Treasury yield was at 4.9705%.
The 2-year to 10-year Treasury yield spread stood at 39.37 basis points.
The 5-year to 30-year Treasury yield spread was at 75.77 basis points.
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