Treasury yields pull back from January 2025 highs
U.S. government bond yields eased after spiking on renewed inflation worries tied to surging oil prices and fresh geopolitical tensions, while solid jobless claims data kept pressure in view.
Olivier Duquesne / Wikimedia Commons (CC BY-SA 2.0)
U.S. Treasury yields eased on Friday after climbing sharply in the previous session, when the 10-year note briefly moved above 4.7% for the first time since January 2025. The retreat came as investors reassessed inflation risks after Brent crude topped $100 a barrel, reviving concern that higher energy costs could spill into prices more broadly.
The benchmark 10-year yield, which influences borrowing costs across mortgages, auto loans and credit cards, was last down 1 basis point at 4.693%. The 2-year yield, which is more sensitive to expectations for Federal Reserve policy, fell almost 2 basis points to 4.333%. The 30-year yield was unchanged.
Oil-driven inflation fears return
The move higher in yields on Thursday reflected a renewed market focus on inflation rather than growth. A jump in oil prices can feed through to transport, production and consumer costs, making it harder for policymakers to argue that price pressures are fully contained.
Geopolitical tensions also added to the bid for energy and the caution in bond markets. Trump said he would soon decide whether to authorize what he described as a “massive attack” on Iran, after the conflict widened into the Red Sea. U.S. strikes on Iranian targets continued overnight, extending the military escalation.
Labor data keep policy focus alive
A separate report on weekly jobless claims offered little immediate relief for bond investors. New applications for unemployment benefits for the week ended July 18 came in at 187,000, below economists’ expectations of 212,000, pointing to a labor market that remains relatively firm.
Because yields and bond prices move in opposite directions, the rise in Treasury rates has already tightened financial conditions at the margin. Traders are now weighing whether the latest oil shock is temporary or the start of a more persistent inflation impulse that could keep longer-dated yields elevated.
The latest moves leave the 10-year note close to levels last seen at the start of 2025, underlining how quickly sentiment can shift when energy prices and geopolitics collide. For markets, the key question is whether upcoming data show inflation still manageable or force a sharper repricing of rate expectations.
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