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Washington — U.S. Treasury yields climbed to their highest levels in about two months on Tuesday as a sharp rise in oil prices intensified concerns about persistent inflation and a prolonged period of restrictive Federal Reserve policy. The two-year yield led the move, jumping to 4.2573% and driving a broad selloff across the curve, while the benchmark 10-year yield rose 3.44 basis points to 4.6261% and the 30-year yield climbed 1.56 basis points to 5.1281%. The advance in yields extended a recent trend that has seen the 10-year note rise from around 4.40% in early July, as resilient economic data and stubborn inflation readings prompted investors to scale back expectations for imminent interest-rate cuts. The two-year yield, which is more sensitive to anticipated Fed policy, has similarly moved higher from around 4.10% over the same period, reflecting markets’ view that borrowing costs are likely to stay elevated. New York — The bond-market moves came as oil prices rose on heightened geopolitical tensions, after President Donald Trump warned that Iran would "pay" for the deaths of three American servicemembers over the weekend. West Texas Intermediate crude advanced 2.6% to $85.35 a barrel, its highest level since June 12, while Brent crude gained 2.5% to $91.50. Higher energy costs have pushed the national average gasoline price back to $4 a gallon, up from $3.79 in early July, according to AAA. Inflation-protected securities also firmed, with the 10-year TIPS yield up 2.93 basis points to 2.3461% and the two-year TIPS yield gaining 4.37 basis points to 2.3137%. The ICE U.S. Dollar Index rose 0.2% to 101.04, Bitcoin traded around $66,600, and U.S. equities ended higher, with the S&P 500 up 0.5%, the Nasdaq Composite gaining 0.9% and the Dow Jones Industrial Average adding 0.6%.

By Sidra | JQJO News