Treasury yields fall as crude oil retreats and another Fed governor floats idea of July rate cut

U.S. Treasury yields were lower Monday as crude oil prices dropped, lessening the inflationary impact of energy costs on the economy, and as Federal Reserve Governor Michelle Bowman said she would favor an interest rate cut at the next policy meeting in July so long as inflation pressures stay muted, echoing a call made by Fed Governor Christopher Waller on Friday.

The 10-year Treasury note yield tumbled 4.7 basis points to 4.330%, while the 30-year bond yield moved 3 basis points lower to 4.858%. The 2-year yield slid 5.7 basis points to reach 3.851%.

One basis point is equal to 0.01%, and bond yields and prices move in opposite directions.

Crude oil prices fell about 1% in early trading Monday, reversing overnight gains, as investors dismissed the risk that Iran could disrupt crude supplies after the U.S. attacked Iranian nuclear facilities on Saturday using B-2 bombers flown from Missouri.

Oil fell to session lows after President Donald Trump called on “everyone” to keep oil prices lower. It was unclear who he was addressing, although he was likely calling on the U.S. oil industry to boost production.

Global benchmark Brent had jumped more than 5% in the wake of the U.S. attack on Iran, rising above $81 a barrel before pulling back, while West Texas Intermediate crude also briefly reached its highest price since January.

Meanwhile, Fed Governor Bowman said Monday she would favor an interest rate cut at the U.S. central bank's next meeting in July as long as inflation pressures appear contained.

In remarks for a speech in Prague, Bowman became the second central banker in recent days to suggest that President Trump's tariffs are likely to have only a temporary and muted effect on prices, thus paving the way for lower rates.

“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market,” Bowman said in prepared remarks. “In the meantime, I will continue to carefully monitor economic conditions as the Administration's policies, the economy and financial markets continue to evolve.”

Some of those conditions are due to be revealed this week, with the release on Friday of the May personal consumption expenditures index — the Federal Reserve's preferred measure of inflation in the U.S. economy.