U.S. Treasurys rose in early European trade while German 10-year Bund yields hit their highest since 2009 on Monday as yet another setback in efforts to resolve the Middle East conflict pushed oil prices higher.

Peace negotiators are pressing Iran to make a concession on its nuclear program to revive ceasefire talks with the U.S. after President Trump rejected Iran's truce proposal.

Treasury yields hovered close to their recent peaks, with the 10-year Treasury yield up 1.7 basis points at 5.197%, having hit a multiyear high of 5.230% on Friday, according to Tradeweb. The 10-year German Bund yield rose to 3.631%, its highest since mid-2009, according to Tradeweb.

"The bond markets remain in a precarious state," Commerzbank rates strategist Rainer Guntermann said in a note.

In the eurozone, government bond supply will be significant, including from the eurozone's four largest issuers--France, Germany, Italy and Spain--, which could hinder any potential rally.

"We are in a one-factor world right now with oil prices impacting rates and rates being the main driver of all asset classes," said Mohit Kumar, global economist at Jefferies, in a note.

Yields on 10-year U.K. government bonds rose 0.6 basis points to 5.395%.

The average yield on a global bond gauge has now climbed above 4% for the first time since 2007, underlining the scale of the global rates reset, said Patrick Munnelly, market strategist at Tickmill Group. "This is no longer just a U.S. story," he said.

"Higher oil, sticky inflation expectations, resilient activity and heavy sovereign financing needs are combining to push global discount rates higher," he said.

The stalling pushed oil prices higher, with front-month Brent crude for November rising 2.5% to $106.93 a barrel. Higher oil prices keep inflationary pressures intense, which in turn reinforces market expectations of further interest-rate hikes by the Federal Reserve. Money markets currently price in a 68% probability of a 25-basis-point rate raise by the Fed in October.

"Weak economic data no longer necessarily means lower interest rates," Alain Krief, global chief investment officer at Edmond de Rothschild Asset Management, said in a note. "Favorable economic data is no longer necessarily good news for risky assets if it further delays monetary easing. It is this asymmetry that we must now consider in our investment decisions."

High yields are leaving investors cautious, although there could be scope for some retracement.

"In our view the Treasury market is going through a light buyer's strike," Citi strategist Jason Williams said in a note. Strong purchasing managers data last week and hawkish Federal Reserve speeches are "likely keeping buyers at bay," he said.

This week could bring some respite to Treasurys, according to Citi's Williams, given the lack of issuance. "So far in 2026, Treasurys have tended to sell off more so on auction weeks than no supply weeks," he said.

J.P. Morgan strategists stick to their bearish view on U.S. Treasury duration given the upcoming U.S. labor-market report on Friday and technical factors. However, they said their bearish bias wasn't as strong as it has been in recent weeks.