U.S. consumer inflation increased at its fastest pace in three years in May as the Middle East conflict raised the price of gasoline and other energy products, giving more ammunition for the Federal Reserve to keep interest rates unchanged into 2027.

Treasury yields rose Monday, as investors monitored domestic inflation and rising energy costs.

Bond traders price in Fed rate hikes as April CPI hits 3.8% and the 2-year Treasury yield reaches 4.18%, the highest since February 2025.