The 10-year Treasury yield rose above 4.9%, its highest since 2023, as a surge in oil prices fuels inflation concerns.

Treasury yields hit a multi-year high on Thursday as traders digested U.S. oil prices again topping $100 a barrel, overshadowing a report of tepid inflation.

The closely watched bond buyback program went ahead as planned, although the Treasury purchased even fewer securities than planned on Wednesday.

The yield on the 10-year U.S. Treasury note, a key benchmark for mortgages, auto loans and credit card debt, rose more than 11 basis points to 4.954%. This is the highest level since October 26, 2023, when the 10-year yield hit 4.989%.

The yield on the two-year Treasury note, which is typically more sensitive to the Federal Reserve’s near-term interest rate decisions, rose more than 13 basis points to hit a high of 4.56%, its highest trading level since July 2024.

The yield on the longer-term 30-year Treasury note, which moves in line with broader geopolitical risks, rose more than 8 basis points to 5.368%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

U.S. bond yields rose on Wednesday after Treasury Secretary Scott Bessent said the department would buy $6 billion of long-term government bonds. The rise continued on Thursday as Oil prices in the USA exceeded $100 per barrel on fears of a protracted conflict in the Middle East between the United States and Iran.

On Thursday, the Treasury repurchased nearly $5.2 billion in outstanding 10- and 20-year notes, only about half of the $10.5 billion offered. The operation was concentrated among a few holders, likely primary dealers, indicating that the buyback program is aimed at providing liquidity in specific areas of the market rather than a broad effort to buy back government debt.

Following the announcement of the buyback, the yield changed little compared to the previous level.

At the same time, rising oil prices and their impact on future inflation and interest rates overshadowed headline inflation data, which showed prices rose 0.4% in August. This growth was in line with the Dow Jones consensus forecast. Excluding food and energy, core prices rose 0.2% for the month, slightly below the 0.3% rise expected.

Yields also remained higher even after a strong 30-year auction that saw stronger-than-expected demand. “Today’s 30-year bond auction was very strong with stop transit of 2.7 bps and non-dealer trading of 97.8% compared to the 88.5% average for the 6-share re-open,” BMO Capital Markets said.

With wholesale price data already out and 10-year yields at multi-year highs, investors will now be looking forward to Friday’s consumer price data to get a clearer picture of the U.S. inflation picture and the Federal Reserve’s interest rate decision next week.