A US-Iran agreement prompted traders to pare Federal Reserve tightening expectations and sent US Treasury yields lower across the curve, with the short end—most sensitive to policy—falling the most. Interest-rate swaps price roughly a 60% chance of a 25bp Fed hike before December, down from about 80% last Friday. The move reflects market optimism that resolving the Iran conflict will help reopen the Strait of Hormuz and put downward pressure on oil. Some rate-market shorts are likely being cover

A US-Iran agreement prompted traders to pare Federal Reserve tightening expectations and sent US Treasury yields lower across the curve, with the short end—most sensitive to policy—falling the most. Interest-rate swaps price roughly a 60% chance of a 25bp Fed hike before December, down from about 80% last Friday. The move reflects market optimism that resolving the Iran conflict will help reopen the Strait of Hormuz and put downward pressure on oil. Some rate-market shorts are likely being covered, said Matthew Haupt, hedge fund manager at Wilson Asset Management in Sydney. Central banks, he added, can afford a more patient stance and may look through near-term inflation.