U.S. Treasury bonds fell on Wednesday, with long-term yields hitting intraday highs following a 20-year bond auction that encountered soft demand. Expectations of potential U.S. military intervention in Iran pushed oil prices higher, also influencing Treasury movements.

In late trading, yields rose by 2–3 basis points across maturities, while yield spreads remained largely unchanged.

Earlier in the U.S. session, economic data releases—including December durable goods orders, housing starts, and January industrial production—all came in stronger than expected, contributing to the rise in yields.

WTI crude futures climbed steadily during the session, closing up 4.6% and approaching the upper end of a range last seen in early August.

The 20-year Treasury auction, held at 1 p.m. New York time, saw a high yield of 4.664%, 2 basis points above the pre-auction trading level at the bid deadline. Auction metrics indicated weak demand: primary dealers took down 17.6% of the offering, the highest share since December 2024, while indirect bidders were allotted only 55.2%, the lowest since 2021.

The release of Federal Open Market Committee (FOMC) meeting minutes at 2 p.m. New York time had little effect on market-implied expectations for interest rate cuts. Markets continue to price in two 25-basis-point cuts by year-end, despite the minutes noting that "several" policymakers viewed rate hikes as appropriate should inflation fail to ease.

As of 3:54 p.m. New York time: - The 2-year Treasury yield stood at 3.4658%. - The 5-year Treasury yield was 3.6539%. - The 10-year Treasury yield reached 4.0865%. - The 30-year Treasury yield climbed to 4.7118%. - The 2-year/10-year yield spread was 61.866 basis points. - The 5-year/30-year yield spread measured 105.615 basis points.