U.S. Treasury yields climbed higher on Monday as oil prices soared past $100 a barrel, fueling fears among investors that the U.S. economy could spiral into a recession with rising inflation.
The benchmark 10-year Treasury yields rose more than 2 basis points to 4.161%, and the 30-year Treasury bond added more than 1 basis point to yield 4.771%. The 2-year Treasury note yield was more than 4 basis points higher at 3.60%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
The recent rise in oil prices in the wake of the Iran war have sparked concerns about increasing energy costs as well as an inflation spike, with some even forecasting that prices hitting $100 a barrel could lead to a global recession. West Texas Intermediate was last trading around $98 per barrel, and global benchmark Brent was at $100 per barrel.
The surge in oil prices came after major Middle Eastern oil producers, Kuwait, Iran, and the UAE, cut oil production following the effective closure of the Strait of Hormuz amid the war.
“All the ingredients are here for recession and the fears are growing that the Trump 2.0 economic officials have more variables going against them than they can possibly control to keep the economic ship afloat,” said said Chris Rupkey, FWDBONDS chief economist.
“The U.S. economy does not need another kick in the head from an oil price spike. Get out, move to safer waters, sell everything and stay liquid while you can. The worst may be yet to come,” he also said.
Elsewhere, investors are looking ahead to a busy week of economic data, including February inflation data on Wednesday, the personal consumption expenditures index, and JOLTs job opening figures for January on Friday.
Additionally, Federal Reserve officials are currently in their pre-meeting blackout period ahead of the March interest rate decision.