On Tuesday, U.S. Treasury yields fell, with the 10-year note yield dropping over 2 basis points to 4.449%, and the 2-year note yield decreasing to 4.047%. The decline in yields follows a provisional peace agreement between the U.S. and Iran, which is expected to ease geopolitical tensions and potentially stabilize energy prices.
President Trump announced that the peace framework has been signed, allowing for the reopening of the Strait of Hormuz, a critical shipping route, free of Iranian tolls. Investors are also focused on the Federal Reserve's two-day policy meeting, which is the first under new chairman Kevin Warsh.
The Fed is expected to maintain its benchmark lending rate between 3.50% and 3.75%, with traders reducing expectations for future rate hikes. Mark Haefele, chief investment officer at UBS Global Wealth Management, noted that a resolution to Middle East tensions could alleviate pressure on central banks to raise rates in response to rising energy prices.
Additionally, economic data on housing and retail sales is set to be released on Wednesday, which could further impact market dynamics