The benchmark 10-year US Treasury yield rose nearly 3 basis points to touch 4.49%, its highest level since July 17, as investors reacted to a fresh spike in producer prices driven by surging energy costs linked to the ongoing geopolitical conflict in West Asia.
The move came after the US producer price index (PPI) jumped 1.4% in April on a seasonally adjusted basis, far above Dow Jones estimates of 0.5% and higher than March’s revised 0.7% increase. The latest reading marked the sharpest monthly rise in wholesale prices since March 2022.
On a yearly basis, producer inflation surged 6%, the highest level recorded since December 2022, adding to concerns that inflationary pressures are once again intensifying across the US economy.
Higher oil prices appeared to be at the centre of the inflation spike, with transportation and production costs rising across industries.
Also read: OPEC lowers 2026 oil demand outlook, raises 2027 growth forecast
The bond selloff extended across maturities. The yield on the rate-sensitive 2-year Treasury note rose to 4.00%, while the 30-year Treasury bond yield climbed 2 basis points to 5.05%, also marking its highest level since July 17. Bond yields move inversely to prices, and one basis point equals 0.01%.
The latest wholesale inflation print arrived a day after US consumer inflation data also came in hotter than expected. According to the Bureau of Labor Statistics, consumer prices rose 3.8% annually in April — the highest reading since May 2023 and above economists’ estimate of 3.7%.
Core inflation, which excludes food and energy prices, rose 2.8% year-on-year, also overshooting market expectations of 2.7%. Both readings remain significantly above the Federal Reserve’s long-term inflation target of 2%.
The sharp jump in Treasury yields signals that markets are increasingly pricing in a prolonged higher-rate environment as inflation risks continue to outweigh expectations of imminent rate cuts.
