Oil Price Surge Sends Long-End Treasury Yields Soaring

Long-end U.S. Treasury yields have surged to their highest levels since 2007, driven by rising international oil prices and growing concerns about inflation. The 30-year Treasury yield rose more than 4 basis points to 5.311%, while the 10-year Treasury yield gained over 2 basis points to 4.724%. The recent climb in oil prices has intensified worries about energy supply risks, particularly with the expiration of the 60-day peace agreement between the U.S. and Iran.

The widening U.S. fiscal deficit, heavy corporate bond issuance, and increased term premium demanded by investors are also contributing to the rise in Treasury yields, according to Barclays' Head of U.S. Rates Research Anshul Pradhan. Despite recent weak economic data, including a 0.6% month-over-month decline in July's retail sales and a flat Producer Price Index (PPI), long-end rates have continued to climb.

The Federal Reserve's July FOMC minutes are due for release on Wednesday, with markets closely watching the Fed's debate over whether to further tighten monetary policy despite cooling inflation. The Fed voted 9-3 in July to keep the federal funds rate target range unchanged at 3.50%, 3.75%, with three dissents favoring a 25-basis-point hike.