US Treasury Yields Reach 24-Year Highs Amid Energy-Driven Inflation

US Treasury yields have reached their highest levels in 24 years due to growing concerns over energy-driven inflation, which may prompt tighter monetary policy. The 10-year Treasury yield rose to 5.33%, while the 30-year yield touched 5.67%. The two-year US yield advanced for the second consecutive session, reaching 4.92%.

Oil prices remain elevated as the US and Iran made little progress in negotiations, despite signs of recovering Middle East supply flows. Deutsche Bank's Jim Reid characterizes the period as 'a tricky quarter,' citing the re-escalation of the US-Iran conflict as a key driver of market stress.

The recent inflation metrics were softer than expected, with the August PCE price index rising 0.3% month-over-month against a 4% forecast. Core PCE grew 0.2%, below the 0.3% consensus. Headline PCE inflation decelerated to 3.4%, coming in significantly under the projected 3.7%. The Federal Reserve's rate hike expectations eased following the release, with markets now pricing in a 39% chance of an October increase.