Soaring oil prices trigger US Treasury sell-off, two-year yield surges to eight-month high

⑴ On Thursday, the surge in oil prices accelerated the sell-off of U.S. Treasury bonds, especially short-term Treasuries. Brent crude oil at one point reached a high of $119.13 during the session, as attacks on energy infrastructure in the Gulf region heightened market concerns about supply disruptions. ⑵ Analysts pointed out that the escalating tensions in the Middle East remain a key driver for the market, with ongoing disruptions to the region's energy infrastructure pushing up oil prices and intensifying inflation worries. ⑶ The Federal Reserve kept interest rates unchanged on Wednesday and indicated that a rate cut is unlikely in the near term, further weighing on short-term bonds. According to Tradeweb data, the yield on the two-year U.S. Treasury rose to 3.830%, the highest level since August, before retreating to 3.816%, still up 7.5 basis points for the day. The yield on the 10-year U.S. Treasury rose 3.2 basis points to 4.287%.