U.S. Bond Market: Treasury Bonds Decline, Oil Prices Rebound, and Auction Demand Remains Weak

MaticHoleFiller · 2026-03-29T00:55:20+00:00

U.S. Treasury bonds fell after the auction ended, closing near their lows, indicating weak investor demand. Rising oil prices added pressure to the bond market, with yields generally increasing; the 10-year yield reached 4.41%. The S&P 500 index declined, while WTI and Brent crude oil prices rose, as market expectations for a Federal Reserve rate hike intensified.

MaticHoleFiller

2026-03-29 00:55:20

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U.S. Treasury yields fell on Thursday, nearing intraday lows after the final of three longer-term bond auctions this week—the 7-year Treasury auction. The winning yields for all three auctions were above trading levels before issuance, a rare occurrence that indicates weak investor demand. The bond market was already under pressure ahead of the auction due to a rebound in oil prices, with Brent crude rising more than 6% after U.S. President Trump threatened to increase military action against Iran.

Shortly after 3 p.m. New York time, the yield curve rose across the board by about 3 to 11 basis points, with the short and intermediate ends leading the charge, narrowing the 2s10s and 10s30s spreads by about 2 basis points and 5 basis points, respectively; the 10-year yield rose by about 8 basis points to 4.41%.

The U.S. Treasury issued $44 billion in 7-year notes, with the winning yield 0.8 basis points higher than pre-issuance trading levels, although yields had already risen about 8 basis points before the 1 p.m. bidding deadline; participation metrics were similarly weak, with the allocation to primary dealers rising to 12.4%, the highest since November, while the allocation to indirect bidders fell to 62.6%, and direct bidders received 25%.

The S&P 500 index fell at the close, while WTI rose about 5%, nearing intraday highs; Brent crude surpassed $108 per barrel, with WTI around $95 per barrel.

In the SOFR options market, demand for hedging downside tail risks remains, reflecting market expectations that the Fed’s interest rate hike outlook may heat up in the coming weeks, a theme that has already been evident over the past few days.

As of 3:48 p.m. Eastern time, the 2-year Treasury yield rose by 10.7 basis points to 3.9919%.

The 5-year Treasury yield rose by 12.3 basis points to 4.1%.

The 10-year Treasury yield rose by 8.8 basis points to 4.4196%.

The 30-year Treasury yield rose by 3.3 basis points to 4.9336%.

The yield spread between the 5-year and 30-year Treasury notes decreased by about 9 basis points to 83.19 basis points.

The yield spread between the 2-year and 10-year Treasury notes decreased by about 1.5 basis points to 42.56 basis points.

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