SynopsisUS bond yields climbed significantly on Monday, surpassing 5%. Crude oil prices jumped, reviving inflation concerns among investors.

This surge pushed markets to anticipate another Federal Reserve interest rate hike. Resilient economic growth and government borrowing also contributed to rising yields.

Investors now await the Fed's policy decision on Wednesday. Listen to this article in summarized formatReutersUS Treasury bond yields surged on Monday, with the 10-year Treasury yield rising above 5% for the first time since October 2023, as a jump in crude oil prices revived inflation fears and pushed investors to price in another Federal Reserve rate hike this week.

38%, reflecting fresh pressure across the long end of the bond market. The move came as Brent crude rose to $108 a barrel, stoking worries that higher energy prices could keep inflation sticky.

Investors are now betting heavily that the US central bank will raise interest rates by 25 basis points at its September 15-16 policy meeting. The Fed will announce its decision at 2 pm in Washington on Wednesday after a two-day meeting.

75-4% range and signal that more tightening may be needed if inflation does not cool.. The first is inflation.

Higher oil prices can lift headline inflation and also affect transport, production and consumer costs. If companies pass on higher input costs, underlying inflation may stay sticky.

The second is resilient economic growth. A strong economy gives the Fed less reason to cut rates and more room to keep policy tight.

The third is government borrowing. The US government continues to issue large amounts of debt, and investors are demanding higher yields to absorb that supply.

There are also questions about foreign appetite for Treasuries. Some foreign investors have shown signs of diversifying away from US government debt, reducing one of the traditional sources of demand for Treasuries.

Another factor is corporate borrowing linked to artificial intelligence and data centres. Companies are raising large sums to fund data centre expansion and AI-related investment.

That has increased competition for investor capital at a time when the government is also borrowing heavily. Oil price shock revives inflation fearsThe rise in yields shows how quickly the bond market has turned cautious again.