US Treasury yields decline as hopes of an Iran deal weigh on WTI

• At 5.123%, the US 10-year Treasury yield is nearly two basis points lower.
• Conflicting accounts of US-Iran negotiations accompany WTI’s retreat to $97.58.
• A 7.3% slump in Pending Home Sales reflects demand hit by higher mortgage rates.

Reports that Washington and Tehran may be approaching an agreement were followed by a modest decline in US Treasury yields on Tuesday. A separate report, however, said US-Iran negotiations were continuing and no deal had yet been finalised.

US 10-year yields retreat towards 5.12% on diplomatic hopes and weak housing figures

The US 10-year Treasury yield fell nearly 2 basis points to 5.123%, with the initial decline driven by geopolitical reports that also sent energy prices lower. A recovery in US equities added to the downward pressure on US bond yields. West Texas Intermediate (WTI), the US crude oil benchmark, is 0.67% lower at $97.58 per barrel.

Down 0.32% at 101.66, the US Dollar Index (DXY) tracks the US currency against a basket of its peers.

September’s US Pending Home Sales recorded a change of -7.3%, weaker than the -0.5% forecast, with the slump attributed to higher mortgage rates. Next on the US economic calendar are Initial Jobless Claims on 22 October, followed by the S&P Global Flash PMIs on 23 October.

At 4.789%, the US 2-year Treasury yield remains unchanged. This maturity is the most sensitive to interest rate expectations.

An October interest rate hold by the Federal Reserve was priced into money markets. For the December meeting, however, the figure remains at 89%, according to Prime Terminal.

Daily chart tracks the US 10-year Treasury note yield