U.S. Treasury bonds advanced following reports that the United States and Iran have reached an agreement to extend a ceasefire and are negotiating to end the war entirely. The movement on Thursday pushed Treasury yields lower, in sync with a decline in oil prices. However, according to a report by Axios, the agreement still requires approval from U.S. President Donald Trump. Yields retreated from their intraday highs after a key U.S. inflation indicator rose less than expected. The Axios report triggered a sharp initial drop in yields, though the decline later moderated, with yields across various maturities last down by approximately 2 to 3 basis points. Citing two U.S. officials and a regional source involved in the talks, Axios reported that the agreement includes a 60-day extension of the ceasefire and the initiation of negotiations concerning Iran's nuclear program. The headline Personal Consumption Expenditures (PCE) price index increased by 0.4% in April, while the core measure, which excludes food and energy, rose by 0.2%. Economists had previously forecast increases of 0.5% and 0.3%, respectively. The year-over-year increase in the PCE reached 3.8%, marking the highest level since May 2023.
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