--- title: "U.S. Treasury yields rise, oil prices fall, easing pressure on the Federal Reserve to raise interest rates" type: "News" locale: "en" url: "https://longbridge.com/en/news/294852061.md" description: "Driven by the progress in US-Iran diplomacy, oil prices have fallen, easing inflationary pressures and suppressing expectations for interest rate hikes by the Federal Reserve. US Treasury yields have generally declined, with the 2-year yield hitting a new low since July. The market expects a probability of over 50% for a rate hike in September, with at least one rate increase expected before the end of the year. Investors are focusing on employment data to assess the impact of economic strength on interest rate policy" datetime: "2026-08-04T16:51:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294852061.md) - [en](https://longbridge.com/en/news/294852061.md) - [zh-HK](https://longbridge.com/zh-HK/news/294852061.md) --- # U.S. Treasury yields rise, oil prices fall, easing pressure on the Federal Reserve to raise interest rates U.S. Treasury bonds rose on Tuesday, with signs indicating that the U.S. and Iran are making progress in diplomatic efforts to end the war, which led to a decline in oil prices and tempered market expectations for more than one rate hike by the Federal Reserve in the coming year. Yields on U.S. Treasury bonds across various maturities fell by 4 to 6 basis points, with the 2-year yield dropping to its lowest level since July 20, and the benchmark 10-year yield falling to 4.62%. Since the U.S. attack on Iran at the end of February, U.S. Treasury yields have followed oil price fluctuations to varying degrees. Rising oil prices exacerbate inflationary pressures, strengthening the case for the U.S. to tighten monetary policy. On Tuesday, WTI crude oil futures fell nearly 6%, reaching their lowest level since July 13. This followed remarks from U.S. Treasury Secretary Scott Bessen and a representative from Qatar, suggesting that the U.S. and Iran are close to reaching an agreement. "In an environment where the credibility of the Federal Reserve is under scrutiny and some Fed officials are gradually losing patience with inflation consistently exceeding the 2% target for five years, we believe U.S. Treasuries will continue to be driven by oil price movements," said Priya Misra, a portfolio manager at Morgan Asset Management. Short-term interest rate futures reflect a roughly 15 basis point expectation for a Fed rate hike in September, equivalent to a probability of over 50% for a 25 basis point increase. The likelihood of a rate hike before the end of the year stands at 100%. Just last week, market pricing indicated a 100% probability for two rate hikes. The U.S. Treasury market is also weighing another possibility, that regardless of oil prices, a strong U.S. economy may necessitate higher rates to curb inflation. Investors are awaiting the July employment report due on Friday for clearer signals. Meanwhile, the June job openings data released on Tuesday showed a larger-than-expected decline, but the market's reaction was limited. "A decline in oil prices should help ease inflation expectations and support a more stable outlook for Fed policy," said Sean Simko, head of fixed income investment management at SEI Investments Corp ### Related Stocks - [USOI.US](https://longbridge.com/en/quote/USOI.US.md) - [USO.US](https://longbridge.com/en/quote/USO.US.md) - [BNO.US](https://longbridge.com/en/quote/BNO.US.md) - [SCO.US](https://longbridge.com/en/quote/SCO.US.md) - [UCO.US](https://longbridge.com/en/quote/UCO.US.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [SEIC.US](https://longbridge.com/en/quote/SEIC.US.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) ## Related News & Research - [Oil rises after attacks in Black Sea](https://longbridge.com/en/news/294429490.md) - [Oil tumbles as Trump cancels attack on Iran to reach nuclear deal](https://longbridge.com/en/news/294614703.md) - [Concerning facts about the US national debt](https://longbridge.com/en/news/294981752.md) - [RUBBER-Japan futures fall as Chinese tyre demand stays soft, oil slips](https://longbridge.com/en/news/295043268.md) - [US Treasury yields are little changed as traders monitor possible Iran war deal](https://longbridge.com/en/news/294964599.md)