Treasury yields have risen sharply, with the two-year note's yield surpassing 3.85% for the first time since early April, as rebounding oil prices elevate inflation expectations. Traders are adjusting their forecasts, reducing the likelihood of Federal Reserve interest rate cuts before the end of next year. The Federal Reserve, led by Jerome Powell in what is anticipated to be his final meeting, is expected to maintain the current target range of 3.5%-3.75%. Oil prices have surged between 2% to 4% due to ongoing supply disruptions linked to geopolitical tensions, particularly following the US attack on Iran. This situation has led to a cautious outlook among Fed policymakers regarding potential rate cuts, even amid deteriorating labor market conditions. The five-year swap rate for the US consumer price index reached 2.7%, marking the highest level since August 2025. Recent Treasury auctions indicated slightly higher yields than anticipated, suggesting a soft demand environment.