Treasury Yields Surge as Fed Hike Odds Spike on Oil
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- Bond traders entered the week pricing a better-than-one-in-three chance that the Federal Reserve hikes interest rates at its Wednesday meeting, citing flaring Middle East tensions and oil-driven inflation worries as the catalyst.
- Benchmark 10-year US Treasury yields jumped 13 basis points last week, reaching 4.71% — the highest level since early 2025.
- 30-year Treasury yields touched 5.19%, approaching levels not seen in nearly two decades.
- Brent crude surged back above $100 a barrel at one point last week amid threats of escalation in the Iran war, feeding directly into the inflation concerns reshaping rate expectations.
- The Fed meeting is scheduled for Wednesday, with oil's surge and the resulting yield spike leaving traders sharply repricing the policy path just days before the decision.
Why it matters: The shift from rate-cut pricing to a one-in-three rate-hike bet — driven by oil crossing $100 on the Iran war — has already pushed 10-year yields to their highest since early 2025 and 30-year yields near two-decade highs, tightening financial conditions across mortgages, corporate debt, and equity valuations before the Fed even meets.
