Treasury yields climb as oil rally revives inflation concerns

U.S. government bond yields rose Thursday, with the 10-year Treasury yield trading above 4.7% for its highest level since January 2025, according to CNBC market data. The move came as a sharp rebound in oil prices renewed investor concern that energy costs could feed through to inflation and complicate the interest-rate outlook.

The 10-year yield was recently up 5 basis points at 4.707%, CNBC reported. It had reached its highest point since Jan. 15, 2025, when it touched 4.790%.

Shorter- and longer-dated maturities also sold off. The two-year Treasury yield, which is closely tied to expectations for Federal Reserve policy, rose more than 4 basis points to 4.343%. The 30-year Treasury bond yield increased more than 4 basis points to 5.188%.

Bond prices and yields move in opposite directions. A basis point is one-hundredth of a percentage point, so a 5 basis-point rise represents a 0.05 percentage-point increase in yield.

Oil shock returns to the rates debate

Crude prices climbed as geopolitical risk in the Middle East intensified. CNBC reported that Brent crude futures for July delivery rose 5% to trade above $99 a barrel, near the $100 mark, after reports of attacks on tankers off Saudi Arabia and renewed U.S. threats to increase strikes against Iran.

West Texas Intermediate crude futures advanced about 4% to more than $90 a barrel, according to CNBC. Brent reached its highest level since before the U.S. and Iran agreed last month to end the war in the Middle East, CNBC reported.

Higher energy prices can affect the Treasury market through several channels. If fuel costs lift headline inflation, investors may demand higher yields to compensate for the reduced purchasing power of fixed coupon payments. A renewed inflation impulse can also affect expectations for the Federal Reserve’s policy path, particularly at the front end of the yield curve.

Labor-market data added another input for rates investors. Initial jobless claims for the week ended July 18 were 187,000, below the 212,000 expected by economists surveyed by Dow Jones, CNBC reported.

Chris Rupkey, chief economist at FWDBONDS, told CNBC that the economy appeared to be strengthening, while the outlook for employment could become less stable because the escalation of the Middle East conflict had reversed the recent direction of energy prices.

Investors were also looking to Friday’s S&P Global Flash U.S. PMI report, CNBC reported. The survey tracks activity in the U.S. manufacturing and services sectors and is used by markets as a timely gauge of business conditions.

Global bond yields move higher

The rise in yields was not confined to the United States. Government bond yields also increased across Asia and Europe on Thursday, according to CNBC.

In the U.K., the 10-year government bond yield rose 4 basis points to above 5%. CNBC reported that investor unease increased after new Prime Minister Andy Burnham cut property taxes for hospitality venues.

The 20% reduction in business rates is expected to cost about £100 million, or $134 million, and is intended to shield pubs, clubs and music venues from higher costs, CNBC reported.

This story draws on original reporting from CNBC.