Treasury yields move lower after light producer price reading, lower oil prices
Treasury yields ticked lower on Tuesday following a softer-than-expected producer price index reading and as oil prices declined.
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A trader works on the floor of the New York Stock Exchange (NYSE) at the opening bell on March 5, 2026 in New York City.
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Treasury yields ticked lower on Tuesday following a softer-than-expected producer price index reading and as oil prices declined amid the latest developments in the Middle East.
The yield on the 10-year U.S. Treasury note — the benchmark for government borrowing — dropped more than 1 basis point to 4.279%.
The 2-year Treasury note yield, more sensitive to short-term Federal Reserve interest rate decisions, was down less than 1 basis point to 3.776%. The longer-dated 30-year Treasury bond yield edged down more than a basis point to 4.884%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
On Tuesday, the Bureau of Labor Statistics reported that the producer price index rose 0.5% in March compared with February, well below the 1.1% that economists polled by Dow Jones were expecting.
Excluding volatile food and energy prices, so-called core PPI rose just 0.1%, also below the consensus estimate that had called for a 0.5% increase.
The wholesale price data comes as investors continue to gauge the lasting impact of the Iran war on inflation and the direction of Federal Reserve interest rate policy later this year.
"Net, net, producers are still reporting above-normal price increases, which will put upward pressure on inflation the consumer is already seeing," said Chris Rupkey, FWDBONDS' chief economist. "The only good thing is that producer price inflation was perhaps not as bad as feared given March is the first full month since the Iran war began."
"More inflation is on the way to consumers based on today's producer price report, it is just a matter of time," Rupkey added.
Energy prices fell on Tuesday. West Texas Intermediate crude futures last traded at $93 per barrel after declining 5% as investors assessed the U.S. blockade of the Strait of Hormuz that's aimed at forcing Iran to reopen the vital shipping lane.
Treasury yields edged lower on Monday amid renewed optimism over a potential lasting resolution to the conflict following last week's uneasy ceasefire agreement.
