Treasury Yields Rise as Oil Prices and Inflation Fears Pressure Bond Markets

U.S. Treasury yields rose Monday as higher oil prices renewed inflation concerns and investors awaited labor-market and economic data that could shape expectations for Federal Reserve policy.

CNBC reported that the benchmark 10-year Treasury yield climbed more than 3 basis points to 5.219%, while the 30-year yield rose 2 basis points to 5.529%. The 2-year yield, which is especially sensitive to expectations for Fed policy, increased more than 5 basis points to 4.916%. Economies.com separately reported the 10-year yield at 5.234%, its highest level since July 2007.

The rise came as West Texas Intermediate crude futures gained about 4% to $96.13 a barrel amid concerns about Middle East oil supplies. Government bond yields also moved higher in several overseas markets, including Britain, France and Japan.

Investors are awaiting U.S. job-openings figures, nonfarm payrolls and the unemployment rate, along with inflation and economic-growth readings. MarketWatch reported that another strong employment report could push longer-term Treasury yields higher and increase pressure on the Fed to raise rates in October.

Higher yields are raising borrowing costs for consumers, businesses and the federal government. Fortune reported that annual federal interest expense has reached $1 trillion. In a scenario requested by Sen. Jeff Merkley in which interest rates rise 1 percentage point above baseline projections, the Congressional Budget Office estimated publicly held debt would reach 222% of gross domestic product by 2056, compared with 175% under its current baseline.