US Treasury yields: Oil returns larger

The 10-year Treasury Department The yield initially rose before falling on Monday as oil prices initially rose above $100 a barrel, then later fell after President Donald Trump told a CBS News reporter that the Iran war could soon be over.

The benchmark 10-year Treasury yield fell more than 2 basis points to 4.109%, and the 30-year Treasury yield fell more than 3 basis points to 4.721%. The two-year Treasury yield was little changed at 3.557%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

“I think the war is pretty much over,” Trump said, according to a post on X by Weijia Jiang, senior White House correspondent for CBS News. “They have no navy, no communications, they have no air force.”

After these comments were shared, oil prices fell in extended trading. West Texas Intermediate crude, which hit a high of $119.48 in overnight trading, was last at nearly $87 a barrel and global benchmark Brent was at $91 a barrel. The two had settled higher in the regular session.

The earlier rise in oil prices in the wake of the Iran war has raised fears that rising energy costs could lead to a broader rise in inflation. Some even predict that $100 a barrel could lead to a global recession.

“The market is a little in disbelief,” Warren Pies, co-founder and strategist at 3Fourteen Research, said on CNBC’s “Money Movers,” noting that the market is currently worried about inflation and the Federal Reserve’s interest rate outlook. “It’s probably rational, but basically everything here is priced in for a quick change, and that includes the bond market.”

The rise in oil prices came after Iran, Kuwait and the United Arab Emirates cut oil production after the Strait of Hormuz was effectively closed due to the war that began on February 28.

The group of seven energy ministers will meet virtually early Tuesday to discuss a possible release of oil reserves to combat supply disruptions.

If there is no response and millions of barrels per day are effectively ignored, oil prices will have to rise “to a level that starts to dampen demand and ration that, and that is recessionary,” Pies added. “I think the first indication that we’re at this point in the economy will be [Treasury] Yields begin to decline.

Less immediately, investors expect a busy week of economic data, including February inflation data on Wednesday, followed by January’s personal consumption expenditures index and JOLT job vacancies numbers on Friday.

Federal Reserve officials are in a pre-meeting lockdown ahead of their two-day meeting to decide interest rate policy, scheduled for March 17 and 18.

—CNBC’s Eamon Javers and Spencer Kimball contributed to this report

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