Oil prices topped $100 a barrel after the U.S. attacked several Iranian oil tankers on Wednesday. Prices haven’t surpassed that triple-digit milestone since July.The news wasn’t exactly well-received on Wall Street or the bond market. Yields on short-term Treasurys are rising in response. Wednesday morning, the yield on the 2-year Treasury hit its highest level since July 2024.The reason short-term yields are rising can be boiled down to inflation: Higher oil prices will affect the cost of all kinds of things.“Whether it be construction expenditures that go into the housing market, or whether it be the cost of delivering toys to a big box store, et cetera,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.If inflation stays high or goes even higher, he said he expects the Federal Reserve to hike interest rates.“We have a new Fed chair who is at least threatening to be a little bit more aggressive in raising interest rates and fighting inflation,” LeBas said.Expectations of a rate hike tend to have more of an impact on short-term Treasurys than long-term bonds, said Wilmington Trust Chief Economist Luke Tilley.“The shorter end of the curve is definitely going to be influenced by short-term inflation, and where market participants and traders think the Fed is going to go with rates,” he said.Over the last few months, short-term bond yields have been rising at a faster pace than long-term yields. One reason is long-term bonds reflect other factors, including how fast investors expect the economy to grow.If the Fed is going to hike interest rates, “that is explicitly because they want to slow something down,” said Winnie Cisar, global head of strategy at CreditSights. “Companies are going to be investing less, they’re going to be hiring less, and that brings down growth expectations.”That will cause long-term rates to rise more slowly.Cisar said it’s not necessarily a bad sign when short-term rates rise at a faster pace. But if long-term yields were to rise too quickly, it could be a sign investors think the Fed is letting inflation get out of control.“If you have the long-end of the yield curve that’s just kind of spiraling higher, then that is an indication that some sort of policy mistake has probably been made,” she said.Instead, the fact that short-term yields are rising at a faster pace is a sign that investors expect the Fed to succeed, said Tilley at Wilmington Trust.“The Fed may need to hike rates a little bit in the short-term, but over the long-term, you’ll still have economic growth,” he said.And after all that, inflation could be generally under control.