Treasuries-yields edge up as traders await inflation data

The 2-year note yield, which typically moves in step with Fed interest rate expectations, rose 1.46 basis points to 4.394%, while the yield on benchmark 10-year notes gained 1.43 basis points to 4.798%.

The yield curve between 2- and 10-year notes flattened to 40 basis points.

Yields also increased as oil prices hit a six-week high after Iran-backed Houthis in Yemen attacked Saudi energy facilities, setting oil installations ablaze and threatening a major expansion of the six-month-old Middle East war.

The 10-year yield is trading near its highest level since October 2023 as investors position for possibly higher interest rates, a "higher-for-longer" inflation backdrop and a still-resilient economy.

“The rising yields we've seen so far are pretty close to fundamentals,” said Compernolle, adding that “this could just be a sign of the new normal. It's not necessarily symptomatic of something going wrong.”

The climb, which has also pushed 30-year yields to their highest levels since 2007, has stoked concerns about demand for U.S. debt as the government's fiscal trajectory continues to deteriorate.