The US Treasuries curve bull steepened late in the overnight trading session amidst reports that Iran-US is set for a two-week ceasefire (ending 22 April) amidst further negotiations. Sentiment was weak for the most part of the trading day as there were no clear signs of negotiations breakthrough. However, the market clearly recognised that this choke on energy related commodities can be undone relatively quickly. Even if there is no deal, a ceasefire that would allow ships to transit the Strait safely would go a long way towards easing shortage fears (especially across Asia). War premium eased across the board as WTI tumbled by close to USD 20/bbl, dragging yields lower, pushing the S&P500 to a positive close and the USD weaker. Gold, which is closely positively correlated with risk, also took a leg up.
While there will almost certainly be more volatility ahead, this episode could mark the beginning of the end of the Middle East situation, as far as the market is concerned. The economic impact on interest rates should be considered. Inflation will likely be elevated for some time and that should constrain aggressive bets on Fed easing. Meanwhile, the backend of the curve could focus on likely additional fiscal / military and rebuilding requirements across many parts of the world. Moreover, we note that the US economy was on relatively firm footing. If conflict risks go to the backburner, UST curve steepening could resume. 
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