Iran peace agreement boosts the stock market, U.S. Treasury yields decline

On Wednesday, expectations of a potential de-escalation in the Iran conflict helped lift market sentiment, pushing U.S. Treasury yields lower.

The 10-year Treasury yield fell by more than 3 basis points to 4.275%; the 2-year yield dropped by more than 4 basis points to 3.758%; while the 30-year Treasury yield rose by more than 2 basis points to 4.869%.

One basis point equals 0.01%. Yields move inversely to prices.

In comments made by President Trump on Tuesday, he said U.S. forces would withdraw from Iran “within two to three weeks,” adding that the United States would end the war “whether or not” an agreement is reached. Those remarks quickly sparked market-related volatility.

The situation eased somewhat on Tuesday. Media reports said that Trump told his aides he was willing to end the war even though the Strait of Hormuz is still largely under blockade. Later, other media reported that the president believed Iran’s fighting would likely end soon, with subsequent matters related to the Strait of Hormuz to be handled by other countries.

Fueled by these developments, U.S. equities logged their best single-day performance since May on Tuesday. The Dow Jones Industrial Average rose by more than 1,100 points, up about 2.5%; the S&P 500 rose 2.9%; and the Nasdaq Composite jumped 3.8%.

On Wednesday, in other developments, traders will closely watch the February retail sales report, the March ADP private-sector employment data, and the March ISM manufacturing index.

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