The yield on the 10-year US Treasury note eased to 4.96% on Monday after briefly touching 5.01% earlier in the session, its highest level in 19 years. The move reflected a modest pullback in key energy prices as markets reassessed the scale of inflation risks. Wholesale fuel prices declined after President Trump indicated that Russia and Ukraine would halt strikes on energy infrastructure.
Even so, energy-driven inflation continued to weigh on Treasuries across the curve, as recent data showed that tariffs and elevated fuel costs have fed through into core inflation measures. Money market pricing suggests the Federal Reserve is expected to raise interest rates by 25 basis points on Wednesday.
Longer-dated Treasury yields were also underpinned by the surge in corporate borrowing by AI-related companies, which has constrained the capacity of primary dealers and other financial institutions to allocate capital to US government debt. In addition, persistently hawkish expectations for the ECB and the BoJ added further pressure on global bond markets.
