Context:

Yields on U.S. Treasuries dropped sharply as optimism grew for de-escalation in the Middle East following reports of a potential peace outline with Iran and a pause in the U.S. navy’s Hormuz operation. The 10-year yield fell to about 4.01% and the curve showed broad declines across maturities as energy prices slid. Investors awaited economic data and a possible one-page deal to end the war, while President Trump signaled progress on negotiations. The market move reflected a risk-on tone amid improving sentiment on geopolitical risk, with further direction tied to upcoming data releases and political developments. Momentum may hinge on whether talks translate into lasting tension relief and sustained energy-price dynamics.

Dive Deeper:

• Treasury yields fell across maturities in early trading, with the 10-year benchmark dropping to around 4.01%, signaling a broad move lower in borrowing costs.

• The 2-year note, which tracks near-term Federal Reserve expectations, dipped by more than 6 basis points to about 3.88% as traders priced in a slower path to policy tightening.

• A report from Axios and a pause in the U.S. military operation to guard Hormuz under 'Project Freedom' fueled optimism that the conflict could ease, supporting equities and lower yields.

• Energy markets moved lower as WTI crude slid about 6% to roughly $95.57 per barrel, reflecting the optimism for de-escalation and softer risk premia.

• President Trump referred to progress toward a comprehensive agreement with Iran in a Truth Social post, reinforcing market narratives of potential de-escalation.

• Investors planned to monitor updates on mortgage rates from the Mortgage Bankers Association and job data from ADP, alongside March JOLTS data showing a decline in openings.