Yields Climb as Inflation and Oil Prices Fuel Rate-Hike Bets

U.S. Treasury yields rose sharply on Thursday following the latest inflation reading and a surge in oil prices, increasing bets that the Federal Reserve will raise interest rates next week.

The U.S. producer price index (PPI) increased by 5.4% over the past 12 months, matching consensus expectations, while energy prices jumped 4.2% on a monthly basis after two consecutive declines.

TD Securities' Molly Brooks noted that personal consumption expenditures could be pushed up by rising prices in sectors such as airlines, which may influence the Fed's decision.

The rally in oil prices added to inflation worries, with prices increasing 4% after Iran-aligned Houthi militants seized control of Yemen's port city of Mocha.