All US Treasury yields fell on Tuesday, July 28, as international oil prices continued to decline, with yields across maturities dropping by 4-5 basis points.

At the end of trading, the 2-year US Treasury yield fell 3.11 basis points to 4.289%, the 3-year yield dropped 4 basis points to 4.317%, the 5-year yield declined 3.8 basis points to 4.37%, and the 30-year yield slipped 4.7 basis points to 5.093%. The 10-year yield briefly fell below 4.60% during the session before closing 4.3 basis points lower at 4.608%.

As the US-Iran ceasefire continued, market expectations of easing geopolitical tensions led to a further significant drop in international crude oil futures prices on Tuesday morning, with New York oil prices falling below $80 per barrel by the close. At the settlement, light crude oil futures for September delivery on the New York Mercantile Exchange fell $3.35 to $79.26 per barrel, a decline of 4.06%, while Brent crude oil futures for September delivery on the London ICE Futures Exchange dropped $4.27 to $84.09 per barrel, a decline of 4.83%.

On Monday, Trump told media that he had decided to suspend strikes on Iran to give negotiations a chance, but warned that if diplomatic efforts fail, he could order the resumption of larger-scale military operations. On the same day, Iranian Foreign Minister Araghchi spoke separately with the foreign ministers of Oman and Saudi Arabia to discuss the situation in the Strait of Hormuz.

Data shows that over the three trading days since July 24, the main contract prices for New York and London Brent crude oil futures have fallen by a cumulative 14.03% and 16.49%, respectively.

Market bets on a Federal Reserve interest rate hike have further diminished. According to the CME FedWatch Tool, the probability of the Fed keeping rates unchanged in July is 69.5%, while the probability of a cumulative 25-basis-point hike is 30.5%. By September, the probability of the Fed keeping rates unchanged is 23.4%, with a 56.4% chance of a cumulative 25-basis-point hike and a 20.2% chance of a cumulative 50-basis-point hike.

The Federal Open Market Committee (FOMC) is scheduled to hold a monetary policy meeting on July 28-29, Eastern Time. With newly appointed Fed Chairman Walsh having completely abandoned forward guidance since taking office in May, the outcome of this meeting is even more difficult to predict.

The recent decline in oil prices has also fueled arguments for a pause in rate hikes. However, PGIM's chief US economist, Robert Sockin, noted, "The problem is that the Fed is referencing June inflation data, not the intraday oil price fluctuations in July." The earlier surge in oil prices had already heightened market concerns about the persistence of inflation, while the impact of new tariffs and the AI investment boom on price increases has not yet been fully factored in.