TREASURIES-Yields decline from highs after Trump delays attack on Iran's power plants
By Matt Tracy
WASHINGTON, March 23 (Reuters) - U.S. Treasury yields retreated from multi-month highs in morning trading after U.S. President Donald Trump said he was putting off a plan to strike Iranian energy infrastructure following productive weekend talks between the U.S. and Iran.
The benchmark 10-year yield US10YT=RR fell to 4.305% before rising to 4.322%. It had risen to an eight-month peak of 4.445% in overnight trading.
The two-year yield US2YT=RR briefly fell to 3.792% before climbing back up to 3.813%. It earlier climbed to its highest since July at 4.016%.
"I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East," Trump wrote in a Truth Social post.
He later added in the post that he had ordered a five-day pause to all strikes against Iranian power plants and energy infrastructure.
Yields had gradually risen in overnight trading before Trump's announcement. They have wobbled from their early morning highs as traders weighed Trump's latest move and the U.S. Federal Reserve's decision last week to hold interest rates on hold, according to Guy LeBas, chief fixed income strategist at wealth management firm Janney Montgomery Scott.
"What we're seeing is those positions that were dislocated last week kind of squaring," LeBas said. "And so I'm not sure I would just blame headlines for this rally in U.S. rates, but rather the lack of further negative catalysts and the re-squaring of positions."
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=RR, seen as an indicator of economic expectations, was last at 50 basis points.
U.S. rate futures on Friday began to price in the possibility of an interest-rate hike later this year after the Fed and other central banks last week kept the rates on hold. Markets had priced in a 95.9% chance of no hike for the Fed's April meeting as of Monday morning.
"The question is whether all this repricing is warranted," said Antonio Gabriel, global economist at BofA Securities, in a Monday morning report.
"More disruptive scenarios for global growth may be underpriced, and growth concerns could prevail, tilting some central banks to look through the shock."
Federal Reserve Governor Stephen Miran is scheduled to make a TV appearance this morning, followed by the release of U.S. construction spending data later in the day.
The U.S. Treasury is set to auction $89 billion in 13-week notes and $77 billion in 26-week notes later on Monday.
