US Treasury bonds are falling, and traders are worried that rising oil prices will increase inflation and further increase the pressure on the Federal Reserve to raise interest rates. US two-year Treasury yields rose 2 basis points to 4.42%, the highest since January 2025. The 10-year Treasury yield hovered around 4.81%, close to the three-year high hit last week. As the Middle East conflict heated up again, oil prices continued to rise, and Brent crude rose above $100 per barrel for the first time since July. Meanwhile, US Treasury Secretary Scott Bessent will announce later that he is initially willing to take strong action to expand the treasury bond repurchase program to curb the rise in US bond yields. Evelyne Gomez-Liechtenstein, multi-asset strategist at Mizuho International, said, “The longer high oil prices continue, the harder it is for the market to ignore the inflationary pressure brought about by this. As of now, as long as energy prices remain strong, it will be difficult for the market to maintain a meaningful rebound.”

US Treasury bonds are falling, and traders are worried that rising oil prices will increase inflation and further increase the pressure on the Federal Reserve to raise interest rates. US two-year Treasury yields rose 2 basis points to 4.42%, the highest since January 2025. The 10-year Treasury yield hovered around 4.81%, close to the three-year high hit last week. As the Middle East conflict heated up again, oil prices continued to rise, and Brent crude rose above $100 per barrel for the first time since July. Meanwhile, US Treasury Secretary Scott Bessent will announce later that he is initially willing to take strong action to expand the treasury bond repurchase program to curb the rise in US bond yields. Evelyne Gomez-Liechtenstein, multi-asset strategist at Mizuho International, said, “The longer high oil prices continue, the harder it is for the market to ignore the inflationary pressure brought about by this. As of now, as long as energy prices remain strong, it will be difficult for the market to maintain a meaningful rebound.”