Short-end US yields hit 17-month high as oil surge fuels rate-hike bets
TLT•CPI report and Warsh testimony in focus
His comments set the stage for the U.S. inflation report due later on Tuesday.
"We expect June U.S. CPI to show some relief from lower energy prices, although core inflation is likely to remain sticky," said OCBC strategists.
Investor focus will also be on comments from Federal Reserve Chairman Kevin Warsh as he heads to Capitol Hill on Tuesday to deliver his first congressional testimony since taking over as head of the U.S. central bank.
Two-year yield hits highest since February 2025
The two-year U.S. Treasury yield US2YT=RR, which typically moves in step with interest rate expectations for the Fed, rose 2 basis points to 4.283%, its highest since February 2025.
The yield on the benchmark U.S. 10-year Treasury note US10YT=RR hit a two-month high and was last at 4.619%.
Yields also got a lift on Monday after Federal Reserve Governor Christopher Waller said the U.S. central bank may need to raise interest rates "in the near term" if upcoming data show inflation continuing to run well above its 2% target.
Short-end yields climb as oil and Fed-hike bets rise
SINGAPORE, July 14 (Reuters) - Short-end U.S. Treasury yields rose to a 17-month high on Tuesday as renewed U.S.-Iran hostilities drove oil prices higher and brought interest rate-hike expectations back into focus ahead of a crucial inflation report due later in the day.
The latest escalation of the conflict in the Middle East, where the U.S. military carried out a third consecutive night of strikes against Iran and two tankers came under fire in the critical Strait of Hormuz, sent oil prices to a one month-high.
That has stoked inflationary worries as traders anticipate the U.S. Federal Reserve will hike rates this year. Traders are fully pricing in a hike by September, with the probability of a move in July has risen to 43.3% from 25.7% a week ago, according to the CME FedWatch tool.
