U.S. Bond Market: Treasury Bonds Continue to Rise, Market Anticipates Iran Conflict to Cool Down

MaticHoleFiller · 2026-04-02T05:41:57+00:00

U.S. Treasury yields generally declined, with medium-term bonds leading the gains, influenced by expectations of de-escalation in the Iran conflict and falling oil prices. U.S. stocks rebounded, and traders are optimistic that the Federal Reserve will cut interest rates by the end of the year. The yield spread narrowed, and the market continues to bet on the Federal Reserve's policy.

MaticHoleFiller

2026-04-02 05:41:57

Abstract generation in progress

U.S. Treasury yields extended their gains on Monday, with intermediate-term Treasuries leading the way. Oil prices fell on expectations that tensions related to the Iran conflict may cool. U.S. stocks also rose, as traders continued to readjust their bets that the Federal Reserve will cut rates this year and in 2027.

Just after 3:00 p.m. New York time, U.S. Treasury yields fell across the curve by 3 to 6 basis points. Intermediate Treasuries led the decline, narrowing the 2s5s30s butterfly spread by nearly 4 basis points during the day. The yield on the U.S. 10-year Treasury finished near the intraday low, down 5 basis points on the day, at around 4.3%.

Iranian state media reported that Iranian President Pezeshkian, in a phone call with European Council President Antonio Costa, told him that Iran “has the willingness to end this war,” but only on the condition that several requirements are met, “especially obtaining necessary assurances to prevent aggression from happening again.”

WTI crude oil futures fell about 1% during the day, with most of the decline occurring after reports of the Iranian president’s remarks were published. U.S. Treasury futures also received a brief but strong boost from buying demand. Trading volume for the 10-year Treasury futures surged within one minute, with the June contract seeing about 65,000 lots traded.

For short-term Treasuries, swap contracts continued to readjust their bets on rate cuts by the Federal Reserve. The amount priced in for the December FOMC meeting was about 6 basis points, while the wager at Monday’s close was 2 basis points.

As of 3:40 p.m. New York time, the 2-year Treasury yield was 3.7848%;

The 5-year Treasury yield was 3.9201%;

The 10-year Treasury yield was 4.2889%;

The 30-year Treasury yield was 4.8765%;

The 5-year and 30-year Treasury yield differential was 95.46 basis points;

The 2-year and 10-year Treasury yield differential was 50.21 basis points.

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