Treasury 30-year bonds rose, with yields declining the most in almost three weeks, as plunging oil prices added to investor expectations that inflation will remain subdued while the U.S. economy strengthens.
The yield difference between 30-year bonds and similar-maturity Treasury Inflation Protected Securities this year has declined by the most in three years. West Texas Intermediate crude oil dropped to a three-year low after Saudi Arabia cut prices. Treasuries pared gains after Federal Reserve Bank of St. Louis President James Bullard said a decline in the price of crude is bullish for the economy.
“The market is very focused on the drop in oil,” said Jason Rogan, managing director of U.S. government trading at Guggenheim Securities, a New York-based brokerage for institutional investors.
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