Bond traders have flipped the script entirely, now pricing in meaningful odds of rate hikes as inflation data comes in hotter than Wall Street expected.
The 2-year Treasury yield surged to 4.18%, the highest level since February 2025.
The inflation numbers driving the shift
April’s headline Consumer Price Index came in at 3.8% year-over-year, climbing from 3.3% in March. That’s the highest CPI reading since May 2023. The June 2026 CPI release, expected mid-month, is now shaping up to potentially show the strongest inflation figures in several years.
Energy prices are a major culprit here. Ongoing geopolitical tensions have kept oil and gas costs elevated, and those costs ripple through everything from transportation to food production.
