WTI Falls to $82.36, Increasing Possibility of Interest Rate Freeze

The price of West Texas Intermediate (WTI) crude oil has fallen to $82.36 per barrel, leading to mixed interpretations in the market regarding the Federal Reserve's (Fed) interest rate path. According to iM Securities on the 29th, WTI has decreased by 3.1% compared to the previous month. Alongside this, the yields on 10-year and 30-year U.S. Treasury bonds have dropped by 7 basis points and 6 basis points, respectively, with the 30-year yield falling to around 5.1%. The decline in oil prices reduces upward pressure on energy costs, positively impacting inflation expectations, which could lead to a relief in long-term Treasury yield burdens. Observations of easing tensions between the U.S. and Iran are also contributing to the drop in oil prices. Park Sang-hyun, a researcher at iM Securities, mentioned that if international oil prices fall to the $70 range, the easing of inflation risks would reduce the burden of long-term Treasury yields, increasing the likelihood of the Fed freezing interest rates. There are also analyses suggesting that a continued decline in oil prices could lead to a weaker dollar and a stronger Korean won. However, interest rate expectations may vary depending on inflation indicators and statements from Fed officials, and the market is expected to reflect a comprehensive view of oil prices, long-term Treasury yields, inflation indicators, and Fed officials' remarks.