As falling oil prices reinforce optimism about the outlook for inflation, bond traders are no longer fully pricing that the Federal Reserve will raise interest rates this year. The rebound in the US bond market caused yields to fall by as much as 9 basis points for each term. Among them, the 30-year yield fell 8 basis points before the issuance of new bonds with that maturity on Thursday. The issuance is expected to be the highest yield of a 30-year treasury bond issue since 2001. Benchmark oil prices fell more than 3% on Thursday. Oil prices have been the main driving force for US bond yields since the US attack on Iran triggered a supply shock at the end of February. Traders are interpreting the signals released by the ongoing conflict. The fall in oil prices has strengthened optimism that US inflation has peaked. US government data released on Thursday showed a slowdown in producer prices in July, and the consumer price report released the day before also detected a slowdown in inflation for the second month in a row. The rise in short-term interest rate contracts is driving interest rates lower, indicating that traders are reducing their bets on the Federal Reserve's interest rate hike.

As falling oil prices reinforce optimism about the outlook for inflation, bond traders are no longer fully pricing that the Federal Reserve will raise interest rates this year. The rebound in the US bond market caused yields to fall by as much as 9 basis points for each term. Among them, the 30-year yield fell 8 basis points before the issuance of new bonds with that maturity on Thursday. The issuance is expected to be the highest yield of a 30-year treasury bond issue since 2001. Benchmark oil prices fell more than 3% on Thursday. Oil prices have been the main driving force for US bond yields since the US attack on Iran triggered a supply shock at the end of February. Traders are interpreting the signals released by the ongoing conflict. The fall in oil prices has strengthened optimism that US inflation has peaked. US government data released on Thursday showed a slowdown in producer prices in July, and the consumer price report released the day before also detected a slowdown in inflation for the second month in a row. The rise in short-term interest rate contracts is driving interest rates lower, indicating that traders are reducing their bets on the Federal Reserve's interest rate hike.