US Treasury yields and crude oil prices reversed two days of sharp gains, offering markets tactical relief but leaving structural pressures intact.
The US 10-year yield fell one basis point to 5.19 percent, paring a 20-basis-point rally over the prior two sessions. The two-year yield eased to 4.90 percent. Despite the intraday pullback, both tenors remained elevated relative to pre-selloff levels, signaling that term-premium repricing is incomplete.
Brent crude fell 0.8 percent to $105.70 a barrel after climbing more than 7 percent across the preceding two sessions. The pullback followed reports of US and Iranian negotiators discussing a phased agreement that could involve Iran reopening the Strait of Hormuz and the US lifting its blockade of Iranian ports. Any resolution reducing geopolitical risk in the Persian Gulf would structurally lower energy-risk premiums.
Risk appetite partially recovered in equities. The MSCI Asia Pacific index advanced 0.3 percent, led by Japan. US equity-index futures and European contracts pared earlier losses and indicated higher openings.
Interest-rate swaps price in approximately three additional quarter-point hikes over the next 12 months, reflecting persistent market expectations of Federal Reserve tightening. Elevated energy costs continue to reinforce inflation expectations among investors, keeping terminal rate expectations anchored at elevated levels.
Global bond markets displayed uneven stabilization. Australian and New Zealand 10-year yields moved higher, while a global bond-yield index held around 4 percent, suggesting continued upward pressure in select segments of the debt market.
The Japanese Yen strengthened 0.3 percent to 158.40 per dollar following comments from Japan Finance Minister Katayama. Katayama said President Trump had expressed concern about Yen weakness during his meeting with Prime Minister Takaichi and that both countries would continue coordinating on foreign-exchange issues.
Markets in South Korea, Taiwan, and mainland China were closed for holidays, limiting broader Asian participation in the day's recovery.
