Wall Street expert Yadney: Falling oil prices may push the yield on 10-year U.S. Treasury bonds to the lowest level in over a year.

Ed Yardeni, a senior research analyst on Wall Street, stated that a drop in oil prices could push US Treasury yields back to their lowest levels in over a year. This strategist pointed out that if oil prices continue to fall and the Federal Reserve starts cutting rates next week, the yield on the 10-year US Treasury bond could drop to 3.75%. His view is based on the long-term correlation between two types of assets - this correlation stems from the impact of oil prices on inflation. Yardeni Research Inc. wrote in a report on October 20th, "An excess of crude oil supply, combined with concerns over global economic slowdown, has pushed WTI crude oil prices to their lowest point since the energy market's recovery after the COVID-19 pandemic. This will help lower the overall consumer inflation rate and increase consumer purchasing power." This trend will add momentum to the recent rise in US bonds - previously, US Treasury bonds were supported by market bets on rate cuts and concerns over turmoil in regional US banks. During Asian trading hours on Tuesday, the 10-year US Treasury yield hovered around 3.98%, dropping by about 17 basis points since the beginning of the month. Since the beginning of this year, crude oil futures prices have dropped from a high of $80 per barrel in January to below $58 on Tuesday, and the yield on the 10-year US Treasury bond has also decreased in sync. It is worth noting that this bond rally occurred at a rare moment in the market: bonds and stocks rising together - a scene that is not common, with traders betting that the US economy will achieve a "soft landing": a slowdown in growth that would be sufficient to curb inflation, avoiding a recession. A further drop in oil prices is expected to further boost the US bond market, with lower energy costs potentially cooling inflation further and strengthening the case for the Federal Reserve to continue cutting rates. This could provide more room for the current "Goldilocks market" (referring to the ideal state of the economy not being too hot or too cold) to continue.