On Monday, the benchmark US 10-year Treasury yield climbed above 4.75%, a level not seen since January 2025, driven by a surge in crude prices that strengthened the case for the Federal Reserve to tighten monetary policy.

The fixed-income selloff was not confined to the long end, as five-year yields also advanced to their highest point since early last year. During US morning trading, major oil benchmarks jumped more than 3%, reaching their intraday peaks after President Donald Trump, in an interview with Fox, stated that the US would retaliate with additional strikes following an Iranian attack on American forces.

Monday's activity marks an extension of the recent wave of selling that has swept through the Treasury market. Investors remain on edge over mounting concerns about government debt levels while simultaneously assessing how aggressively the Fed might need to raise rates to combat inflationary pressures. On Friday, short-dated yields spiked after Fed Chairman Kevin Warsh, speaking at the central bank's Jackson Hole Symposium, indicated a greater probability of rate increases aimed at containing price growth.

While 30-year yields also moved higher on Monday, climbing five basis points to around 5.26%, they stayed well below their mid-August multi-year highs. This follows the Treasury Department's announcement earlier in the month that it would increase its buyback operations in that sector to reinforce market stability.

The longest-maturity Treasuries could also see some support from anticipated buying related to month-end rebalancing of bond indices at 4 p.m. New York time. During this process, the above-average volume of 10- to 30-year debt issued throughout the month will be incorporated into the benchmarks.