TREASURIES-Yields surge to one-year high as oil prices and inflation data rattle markets

Updated in New York morning time

Oil prices jump 3% after Trump warns patience with Iran is running out

April inflation data shows largest annual consumer price gain in three years

Yields on 10- and 30-year Treasuries hit highest levels since May 2025

By Karen Brettell

NEW YORK, May 15 (Reuters) - Longer-dated Treasury yields climbed to their highest levels in a year on Friday, as a spike in oil prices stoked fears that ongoing energy disruptions in the Middle East could further fuel inflation — which data this week showed had already surged in April.

Oil prices gained about 2% after comments from U.S. President Donald Trump and Iran's foreign minister further dented hopes of a deal to end ship attacks and seizures around the Strait of Hormuz.

Trump said his patience with Iran was running out and that Chinese President Xi Jinping had agreed during their talks in Beijing that Tehran must reopen the strait.

Tehran has "no trust" in the U.S. and is interested in negotiating with Washington only if it is serious, Iranian Foreign Minister Abbas Araqchi said on Friday.

"We expected more out of the meeting in China with Trump and it didn't seem like there was much progress made in terms of the outcome in the Middle East," said Mike Sanders, head of fixed income at Madison Investments.

“The bond market now is finally like, maybe this quick resolution and snap back in energy prices isn't going to happen and we've got to price in longer-term inflation expectations,” Sanders said.

Investors have already been rattled by strong inflation prints this week showing energy disruptions are being seen in some inflation-based measures. U.S. consumer inflation saw the largest annual gain in three years last month, while U.S. producer prices posted their biggest increase in four years.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, was last up 7.9 basis points at 4.071%, the highest since March 2025.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 10.9 basis points to 4.568%, the highest since May 2025.

The 30-year bond US30YT=RR yield increased 9.9 basis points to 5.112%, also the highest since May 2025.


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