Treasuries advanced for the first time in four days as oil slid after Iran’s deal with world powers over its nuclear program raised the prospect of increased shipments into an oversupplied market.
Benchmark 10-year yields fell from near the highest level this month before a government report that economists said will show retail sales grew at a slower pace in June, highlighting the U.S. economic recovery is far from secure.
Brent, the global benchmark, tumbled as much as 2.5 percent.
Federal Reserve Chair Janet Yellen may give clues on the timing of any rate increases during testimony before Congress this week.
“This morning it seems to be all about oil prices,” said Vincent Chaigneau, London-based global head of rates and foreign-exchange strategy at Societe Generale SA. “The market has priced quite a low probability of a hike in September and I think for the Fed to hike in September, they would need to prepare the markets. They would do that if we got better data, so that’s why retail sales will be very important.”
Treasury 10-year note yields dropped two basis points, or 0.02 percentage point, to 2.43 percent as of 10:20 a.m. London time, according to Bloomberg Bond Trader data.
The 2.125 percent security due in May 2025 rose 6/32, or $1.88 per $1,000 face amount, to 97 10/32.
The yield climbed to 2.47 percent on Monday, the highest since June 26.
Iran agreed to curb its nuclear program in return for an easing of sanctions, according to an official involved in negotiations in Vienna, who asked not to be identified and didn’t elaborate on the details of the deal.
The nation was once OPEC’s second-biggest producer.
An increase in supply that depresses oil prices, which have dropped more than 45 percent in the past year, will further keep inflation, which erodes the fixed payments on bonds, in check and ease pressure on the Fed to raise rates.
Sales at U.S. retailers increased 0.3 percent in June, down from a 1.2 percent growth rate the month before, according to the median forecast of economists surveyed by Bloomberg.
