Over the weekend, the US and Iran ceased hostilities in the Middle East, leading to a decline in energy prices and driving a broad decline in US Treasury bond yields on Monday.

The 10-year Treasury note, a key pricing anchor for mortgages, car loans, and credit card rates, saw its yield fall more than 3 basis points in early trading to 4.6406%. Yields on both short-term and long-term Treasuries weakened in tandem.

The 2-year Treasury yield, which closely follows the Federal Reserve's short-term interest rate policy, fell 2 basis points to 4.3030%. The 30-year Treasury yield, traditionally sensitive to geopolitical conflicts, dropped more than 3 basis points to 5.1260%.

Details on Treasury Yields by Maturity:

Note: 1 basis point equals 0.01%; bond yields and prices move inversely.

The US and Iran have now observed a ceasefire for three consecutive nights, with market financing costs declining on Monday. Oil prices fell sharply: US West Texas Intermediate (WTI) crude futures plunged 5.34% to $84.55 per barrel, while the international benchmark Brent crude, which had neared $100 per barrel last week, dropped 5.77% to $91.20 per barrel.

Markets are awaiting the Federal Reserve's latest interest rate decision, due Wednesday. The consensus expectation is that the Federal Open Market Committee (FOMC) will hold the benchmark rate steady at 3.75%.

On one hand, traders are assessing how changes in the Middle East situation might influence the Fed's interest rate decisions. On the other hand, investors are closely watching a heavy slate of US economic data set for release this week, including the June core Personal Consumption Expenditures (PCE) price index, the latest quarterly Gross Domestic Product (GDP) figures, and US durable goods orders data.