International Oil Prices Hit 4-Month Low...US Treasury Yields Fall for 'Four Consecutive Days'

▲ Crude oil, falling oil prices/AI generated image

US Treasury yields continued their decline for the fourth consecutive day. As international oil prices fell rapidly, inflation concerns eased, and the market began to lower the likelihood of further tightening by the Federal Reserve (Fed) again.

According to CNBC, a US economic media outlet, on June 26 (local time), US Treasury yields fell slightly due to the decline in international oil prices. Expectations that inflationary pressures would ease as oil prices dropped to their lowest level in four months stimulated bond purchases.

The US 10-year Treasury yield fell to around 4.38%. The 2-year Treasury yield, sensitive to monetary policy, also dropped to around 4.09%, continuing its four-day decline.

Behind the shift in market sentiment was a sharp drop in international oil prices. Brent crude and West Texas Intermediate (WTI) fell by more than 3% as oil transportation through the Strait of Hormuz showed signs of normalization. As supply concerns eased, inflation expectations also declined.

Investors also positively received the recently announced US Personal Consumption Expenditures (PCE) price index, which met market expectations. Although inflation still exceeded the Federal Reserve's target, it did not deviate significantly from expectations, supporting the decline in Treasury yields.

The market views future international oil prices and inflation trends as key variables determining the direction of US Treasury yields. The Federal Reserve's interest rate path is also increasingly likely to be readjusted based on future economic indicators and energy price movements.

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