Longer-dated U.S. Treasury yields moved higher on Friday, reaching levels not seen since May 2025, as a jump in oil prices and recent inflation reports weighed on market sentiment.
Oil futures gained 3% after U.S. President Donald Trump said his patience with Iran is running out. That comment heightened concerns about the absence of progress toward a peace agreement to halt ship attacks and seizures around the Strait of Hormuz. Market participants interpreted the oil move as a potential catalyst for renewed upward pressure on inflation.
Those inflation worries were amplified by data this week showing a significant acceleration in April. U.S. consumer inflation recorded its largest annual increase in three years last month, while U.S. producer prices posted their biggest rise in four years. Investors have been rattled by those strong prints, which suggest energy disruptions are already being reflected in some inflation measures.
Market moves were evident across the Treasury curve. The 2-year note yield, which typically tracks expectations for Federal Reserve interest rate moves, rose 7 basis points to 4.062%. Intraday it reached 4.071%, marking the highest level for that maturity since March 2025.
Benchmark 10-year note yields increased 9.3 basis points to 4.552%, touching 4.558% at one point - the highest since May 2025. Longer-term borrowing costs also climbed: the 30-year bond yield rose 8.6 basis points to 5.0992% and reached 5.103%, likewise the highest level since May 2025.
The combination of a near-term oil price spike and recent inflation readings has driven a repricing of interest rate expectations and lifted yields across maturities. Investors remain attentive to developments in the Middle East and to forthcoming economic data that could either reinforce or alleviate the inflation concerns signaled by April's consumer and producer price reports.
Clear summary - A 3% rise in oil after a comment from President Trump and strong April inflation data pushed longer-dated Treasury yields to their highest levels since May 2025, with 2-, 10- and 30-year yields all climbing notably.