U.S. Treasury yields rose on Tuesday as oil prices gained, with benchmark 10-year note yields approaching levels reached in August, which if surpassed would be the highest since 2007.
Oil prices increased on Tuesday for a fourth consecutive session, raising fears that higher commodity prices will keep price pressures elevated and lead the Federal Reserve to raise rates further, or keep them elevated for longer.
“We have a bit of an upward bias on yields as a function of higher energy prices and increasing concern that that’s going to flow through to end users and complicate the Fed’s job of attempting to engineer a soft landing,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.
