Iran and the United States remained at odds over efforts to agree a permanent end to the war in the Gulf, according to a senior Iranian source who said there has been no progress in talks to revive the interim deal agreed in June and define a timeframe to implement it.
U.S. crude CLc1 was down 0.8% at $82.56, weighed down somewhat by the tame inflation reading, but it had risen for four straight sessions.
Elsewhere in the Treasury market, the yield curve steepened following the CPI data, with the gap between 2-year and 10-year yields hitting 48.5 bps US2US10=TWEB, the widest spread since May 22. It was last at 48 bps, compared with 47.2 bps late Tuesday.
The curve showed a bull steepener, a scenario in which short-term interest rates are falling a little faster than longer-dated ones, suggesting rate hikes are being priced out.
Investors will get another test of demand later on Wednesday when Treasury auctions $42 billion in newly issued 10-year notes. Since the last auction, 10-year yields have climbed 12 bps and the curve steepened.
Jay Barry, head of global rates strategy at J.P. Morgan, wrote in a research note that the 10-year note's "technical backdrop appears somewhat more supportive as our Treasury Client Survey index has moved less long this week, suggesting positioning may be less of a headwind."
Overall, he expects the 10-year note to be absorbed smoothly by investors given a higher level of outright yields and a more favorable technical environment.
TLT•
