Treasury Yield Jumps Amid Oil Price Surge
The 10-year US Treasury yield surged to its highest level in three years, reaching 4.841%, as global oil prices skyrocketed due to escalating geopolitical tensions in the Middle East.
The rise in yields comes amid increasing military tensions between the United States and Iran, which have pushed Brent crude above $100 a barrel for the first time since June.
This has added to inflationary pressures facing Federal Reserve policymakers, strengthening expectations for a US interest rate hike in September. According to CME's FedWatch Tool, the probability of a 25-basis-point rate hike stands at 60%, while the probability of leaving interest rates unchanged is 40%.
The Treasury yield rose around 1.0% on Wednesday, extending gains for a third consecutive session and marking its highest level since November 2023. Investors are awaiting US producer price data on Thursday and consumer price data on Friday to reassess their expectations.