Benchmark 10-year U.S. Treasury yields retreated on Thursday, stepping back from an 11-month high as oil prices eased and investors picked up fixed income at key technical levels.
The prior session saw yields move higher after U.S. producer price figures for April showed the largest monthly gain in four years. That increase was attributed to higher costs for both goods and services and was noted as another sign of accelerating inflation linked to the war with Iran.
Market participants flagged the producer-price report for raising the prospect that rising wholesale inflation could soon be reflected in core consumer-price measures that the Federal Reserve closely watches when setting monetary policy.
Energy-market developments remained central to sentiment. Though oil has been supported by disruptions stemming from the Middle East conflict and has stayed at elevated levels with no indications the war is nearing an end, prices fell on Thursday after a state-linked Iranian outlet reported that roughly 30 vessels had transited the Strait of Hormuz in recent hours. The semi-official Fars news agency cited a source saying Iran had begun permitting some Chinese ships to pass.
Fixed-income traders also noted technical dynamics in the Treasury market. Buyers emerged at key technical support, helping stabilize yields after the 10- and 30-year notes earlier reached their highest levels since mid-2025, according to Compernolle.
The 2-year Treasury note yield, which typically moves in step with expectations for Federal Reserve policy, fell 1.9 basis points to 3.971% as part of the broader pullback in shorter- and longer-dated government debt.
The move reflected a mix of inflation worries stemming from recent pricing data and easing near-term energy-driven risk, with both factors influencing how investors price duration across the curve.
Reported facts in this piece are limited to the data and market developments described above. Where information was not specific, the report reflects that limitation rather than adding additional detail.