2017.05.2519:11:00UTC+00Treasury Yields Retreat as Crude Slides after OPEC Convention

U.S. government bond yields after OPEC and its allies reached a consensus to extend production curbs but failed to pacify worries of a global oil glut.

Yield on the benchmark-ten year Treasury note trimmed 1.2 basis point to 2.254 percent. Meanwhile, the yield on the two-year note slid down 0.8 basis point to 1.298 percent, while the 30-year note yield fell 1.3 basis point to 2.921 percent.

Despite solid bets of a rate hike by the Federal Reserve in June, Treasury yields retreated and mirrored traders' skepticism that the production cuts would be deep enough to dent the brimming crude inventories.

Higher energy prices tend to drive up yields by bolstering inflation expectations that could hurt bonds' fixed returns. While the relationship of crude prices and U.S. government bond rates have receded recently, elevated oil prices can stoke inflation. West Texas Intermediate, the U.S. crude benchmark, plunged 4.8 percent to $48.90 per barrel after reports of OPEC's renewal of an output cut accord.

In morning trade, yield rallied marginally after investors equated the declining number of initial unemployment claims as indications of a solid job market.