Treasuries Give Back Ground After Early Surge But Close Modestly Higher
(RTTNews) - After surging early in the session, treasuries gave back ground over the course of the trading day on Monday but managed to close modestly higher.
Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.8 basis points to 4.469 percent after hitting a low of 4.441 percent.
The early rally by treasuries came following news the U.S. and Iran have reached an agreement to end more than three months of war.
President Donald Trump said in a post on Truth Social that a deal with Iran is "now complete" and authorized the "toll free opening" of the Strait or Hormuz and the immediate removal of the U.S. blockade of Iranian ports.
Trump later clarified that the Strait of Hormuz would reopen upon the signing of the deal of Friday for purposes of mine removal.
The agreement reportedly extends the U.S.-Iran ceasefire for 60 days, with the countries set to use that window to negotiate over Iran's nuclear enrichment and the disposal of its highly enriched uranium.
U.S. crude oil futures have plunged by more than 4 percent in reaction to the news, easing concerns about the outlook for inflation.
"Prior to the deal, investors had become increasingly concerned that higher energy costs would feed into broader inflation pressures and potentially force policymakers into additional tightening," said Daniela Hathorn, Senior Market Analyst at Capital.com.
"The sharp decline in oil prices does not eliminate inflation risks altogether, but it does reduce some of the urgency surrounding them," she added. "That is particularly relevant this week as the Federal Reserve meets for the first time under new Chair Kevin Warsh."
In U.S. economic news, a report released by the Federal Reserve showed a modest increase in industrial production in the U.S. in the month of May.
The Fed said industrial production crept up by 0.1 percent in May after climbing by an upwardly revised 0.9 percent in April.
Economists had expected industrial production to rise by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.
