Falling oil prices ease inflation concerns; U.S. Treasuries end their losing streak and rebound
U.S. Treasury prices are poised for their first gain in a week. Oil prices fell after the U.S. military captured the Venezuelan president, easing market concerns about persistent inflation.The yield on the 10-year U.S. Treasury note fell 2 basis points to 4.17%, while the yield on the 2-year note, which is more sensitive to monetary policy, fell 1 basis point to 3.46%. Money markets have fully priced in expectations of two 25-basis-point rate cuts this year Federal Reserve and see a roughly 25% probability of a third cut.On Monday, most global bonds rose as crude oil futures fell amid market concerns over a global supply glut. Any recovery in Venezuelan oil production would follow two decades of continuous decline, and with oil-producing nations such as OPEC+ increasing supply, the market is facing a massive surplus this year."Geopolitical shocks historically tend not to have a lasting impact," Deutsche Bank strategist Henry Allen wrote in a report to clients. "This may come as a surprise, but markets typically trade based on macro variables such as growth and inflation, rather than the geopolitical shocks themselves."
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