U.S. Treasury yields were little changed on Wednesday as oil-price swings drove trading. According to Sina Finance, early losses in WTI crude futures lifted Treasuries, but a rebound in oil prices later in the day erased those gains.
Demand for downside protection in the U.S. Treasury options market remained strong, with several large bearish option trades in longer-dated contracts. By a little after 3:00 p.m. in New York, U.S. Treasury yields were slightly lower on the day, with shorter maturities outperforming and the 2s10s spread widening by about 1.5 basis points.
The 10-year U.S. Treasury yield closed at about 4.795%, near Tuesday's closing level. By the close, WTI crude futures were up less than 1% as investors continued to assess the impact of the latest U.S.-Iran conflict on Middle East energy exports.
Canadian government bonds underperformed U.S. Treasuries after the Bank of Canada struck a hawkish tone following its decision to hold rates steady. Interest-rate swap markets are currently pricing in about an 80% probability of a 25-basis-point rate hike by year-end.
At 4:23 p.m. U.S. Eastern Time, the 2-year Treasury yield was 4.369%, the 5-year yield was 4.5339%, the 10-year yield was 4.78%, and the 30-year yield was 5.2571%. The 2-year/10-year yield spread was 40.9 basis points, while the 5-year/30-year spread was 72.14 basis points.