US two-year Treasury yield hits 16-month high as oil surges

The oil price surge tied to US-Iran tensions lifted inflation expectations in the US bond market and pushed Treasury yields higher. According to CNBC, the US two-year Treasury yield reached its highest level in more than 16 months in mid-July 2026, reviving speculation about Federal Reserve tightening.

At Friday's close on 17 July, the 10-year yield stood at about 4.55% and the two-year at about 4.18%. Still, US consumer inflation rose less than expected in June and producer prices unexpectedly fell, painting a mixed picture of price pressures.