US Treasury yields climbed to multi-year highs on Thursday as a renewed surge in oil prices pushed investors to reassess how quickly the Federal Reserve may need to tighten monetary policy, according to a Bloomberg report. The selloff in government bonds came as benchmark oil prices jumped more than 5% to their highest level since May, reviving concerns that higher energy costs could feed through into broader inflation.

The shift in expectations was visible across the Treasury curve. 5% for the first time since 2024.

“Crude oil drives inflation, and if it starts getting into the system it’s going to be hard to contain it,” Tony Farren, managing director in rates sales and trading at Mischler Financial Group, was quoted as saying by Bloomberg. “There’s no reprieve for yields to go lower if inflation remains elevated.”

Oil drives the moveThe latest move in yields came just a day before the release of US consumer price data, which investors are watching closely for clues about the Fed’s next move. A producer-price report released Thursday showed increases broadly in line with economists’ expectations, but the renewed rise in oil has complicated the inflation outlook.

“PPI data has only reinforced the case for tighter policy and, at the margin, gives the rise in yields a firmer fundamental footing. That said, some of it can be caveated by yet another sharp rise in oil.

Either way, rates are repricing higher in what can only be classified as a global phenomenon," Fagan said. The pressure was not confined to the US.

5%. The ECB said inflation was likely to remain “well above target for an extended period,” according to Bloomberg.

Supply adds pressureOil is not the only force weighing on the bond market. Investors are also confronting a growing supply of government and corporate debt, as governments finance deficits and companies raise funds for capital spending.

35%, a level higher than the results of any 30-year Treasury auction going back to 2001. At the same time, the Treasury Department was due to buy back as much as $6 billion of debt in the 10- to 20-year sector, increasing the targeted amount from $2 billion.

The buybacks are intended to improve market functioning and help contain pressure on longer-dated yields. 9 trillion this year.

2 trillion. The prospect of a prolonged Middle East war has further unsettled investors about US spending.