WASHINGTON (dpa-AFX) - Treasuries showed a notable move to the upside over the course of the trading day on Tuesday, adding to the modest strength seen in the previous session.
Bond prices gave back ground after an early advance but climbed back firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.1 basis points to 4.428 percent.
The strength among treasuries came amid an extended nosedive by the price of crude oil, with U.S. crude oil futures plunging by more than 5 percent.
Crude oil prices have plunged in recent days amid the prospect of an end to the conflict in the Middle East after the U.S. and Iran announced a preliminary agreement.
The agreement, which is expected to be signed on Friday, will purportedly lead the immediate reopening of the Strait of Hormuz.
Prices saw further downside after a report from the Wall Street said the U.S. will allow Iran to immediately begin selling oil and fuel under the deal to end the war.
The steep drop by the price of crude oil has eased concerns about the outlook for inflation ahead of the Federal Reserve's monetary policy announcement on Wednesday.
The Fed is widely expected to leave interest rates unchanged, but the accompanying statement and new Chair Kevin Warsh's post-meeting comments could impact the outlook for rates.
'Investors will be looking for clues about how Warsh intends to navigate an economy where inflation remains above target, growth is still resilient and AI-related investment continues to generate strong demand,' said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, 'The fall in oil prices gives policymakers more flexibility, but underlying inflation pressures have not disappeared.'
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