US Treasury Yields Fall as Scott Bessent Signals Possible Strait of Hormuz Deal

Markets reacted sharply Tuesday as the prospect of a diplomatic breakthrough shifted the calculus for both energy traders and bond investors. Treasury Secretary Scott Bessent told CNBC’s “Squawk Box” that the U.S. is in talks with the Iranians, suggesting a resolution could be reached almost immediately.

“There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.”

Scott Bessent, Treasury Secretary

Treasury Yields and Oil Price Volatility

The immediate fallout of Bessent’s comments was a slide in U.S. government debt yields. According to the WSJ, the 10-year yield declined by 2.9 basis points to 4.598%, while the 30-year yield fell 3.5 basis points to 5.154%. CNBC reported a more pronounced move for the 10-year note, which fell more than 6 basis points to 4.619%.

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This shift in the bond market mirrored a collapse in crude prices. U.S. West Texas Intermediate futures fell 5.69% to close at $75.77 per barrel, while the international benchmark Brent crude dropped 5.26% to $79.36. These figures represent a significant retreat from the heights seen during the conflict, where Brent had previously traded near $100 per barrel.

Asset	Price/Yield Move	Closing Value (CNBC/WSJ)
WTI Crude	-5.69%	$75.77 per barrel
Brent Crude	-5.26%	$79.36 per barrel
10-Year Treasury	-2.9 to -6 bps	4.598% to 4.619%
30-Year Treasury	-3.5 to -4 bps	5.154% to 5.182%

Inflation Stickiness and the “Hawkish Hold”

Despite the immediate rally, some analysts warn that the relief at the pump won’t happen overnight. Tony Miano, a global fixed income analyst at Wells Fargo Investment Institute, noted that oil market fundamentals require time to stabilize before consumers see meaningful changes.

Scott Bessent Says US and Iran Could Reach Deal to Open Strait of Hormuz

The bond market is currently wrestling with two opposing forces: the hope for a geopolitical “off-ramp” and the reality of a “hawkish hold” from Federal Reserve interest rate setters. Prior to this week, the 30-year Treasury had hit its highest level since 2007, driven by fears that elevated oil prices would keep inflation entrenched.

Diplomatic Friction: Trump and Rubio’s Stance

The path to a deal remains fraught with contradictions. While Bessent signals a deal may be hours away, other officials have maintained a harder line.

President Donald Trump has provided a mixed set of signals on social media. On one hand, he described a memorandum for a peace agreement as largely negotiated. On the other, he stated via Truth Social that the U.S. blockade on Iranian vessels in the Strait of Hormuz will remain fully in place until an agreement is ratified and signed.

Iran’s Foreign Ministry has mirrored this cautious approach. A spokesperson confirmed that both sides have reached conclusions on several issues within a potential memorandum of understanding, but explicitly stressed that this does not mean Tehran is close to signing.

Global Market Spillover and Record Rallies

The broader financial impact of the Strait’s reopening has been overwhelmingly positive for equities. PBS reported that Wall Street rallied toward new records after Iran announced the Strait of Hormuz was fully open, allowing tankers to exit the Persian Gulf again.

Scott Bessent Says US and Iran May Reach Deal to Reopen Strait of Hormuz

This development pushed the S&P 500 up 0.8% and the Dow Jones Industrial Average up 678 points, or 1.4%. The rally was supported by strong earnings from financial firms; State Street rose 2.9% and Fifth Third Bancorp added 1.9% after reporting better-than-expected results for the latest quarter.

International markets followed suit. France’s CAC 40 jumped 2% and Germany’s DAX returned 2.2%. However, the reaction was not universal. In Asia, the Nikkei 225 lost 1.8% and Hong Kong’s Hang Seng fell 0.9% before the announcement’s full impact hit those regions.

The volatility of this conflict has created a pattern of vicious and sudden swings in stocks and bonds. While President Trump stated in a speech that the war “should be ending pretty soon,” investors remain wary. Brent crude continues to trade above its pre-war $70 level, suggesting that a significant amount of caution is still embedded in the global financial system.