US Treasury bonds fell after soaring oil prices heightened concerns about inflation, and tension between Israel and Iran escalated further over the weekend. The yield on 10-year US Treasury bonds rose 3 basis points to 4.43% on Monday, underperforming similar German bonds. Traders cut their bets on the Fed's interest rate cut. The rate cut is expected to be 46 basis points before the end of the year, compared to 49 basis points last Friday. “The market is volatile, and investors are flocking to safe-haven assets and driving up crude oil prices,” said Carlos Casanova, senior Asian economist at Union Bancaire Privee in Hong Kong. This could lead to a further rise in 10-year US Treasury yields. “In the short term, risk aversion will prevent interest rates from falling significantly, while rising oil prices and expected inflationary pressure will limit significant increases in interest rates,” wrote Jefferies International European chief strategist Mohit Kumar in the report. He maintained his position on the low ratio of US treasury bonds compared to German treasury bonds. US Treasury yields generally rose, but the short-term increase was small, leading to a steeper yield curve. US two-year Treasury yields rose 2 basis points to 3.96% on Monday. Investors are also concerned about the 20-year treasury bond bid that will take place later in the day. Last week, demand for the much-publicized 30-year treasury bond bid was stronger than expected, easing concerns that investors would avoid America's longest-term bonds.

US Treasury bonds fell after soaring oil prices heightened concerns about inflation, and tension between Israel and Iran escalated further over the weekend. The yield on 10-year US Treasury bonds rose 3 basis points to 4.43% on Monday, underperforming similar German bonds. Traders cut their bets on the Fed's interest rate cut. The rate cut is expected to be 46 basis points before the end of the year, compared to 49 basis points last Friday. “The market is volatile, and investors are flocking to safe-haven assets and driving up crude oil prices,” said Carlos Casanova, senior Asian economist at Union Bancaire Privee in Hong Kong. This could lead to a further rise in 10-year US Treasury yields. “In the short term, risk aversion will prevent interest rates from falling significantly, while rising oil prices and expected inflationary pressure will limit significant increases in interest rates,” wrote Jefferies International European chief strategist Mohit Kumar in the report. He maintained his position on the low ratio of US treasury bonds compared to German treasury bonds. US Treasury yields generally rose, but the short-term increase was small, leading to a steeper yield curve. US two-year Treasury yields rose 2 basis points to 3.96% on Monday. Investors are also concerned about the 20-year treasury bond bid that will take place later in the day. Last week, demand for the much-publicized 30-year treasury bond bid was stronger than expected, easing concerns that investors would avoid America's longest-term bonds.