U.S. Treasury yields climbed on Monday after the Federal Reserve hinted at the possibility of additional interest rate hikes to address persistent inflation. The yield on the benchmark 10-year Treasury note rose to 4.5%, while the 2-year note yield also saw an increase.

Market participants are analyzing incoming economic reports, including inflation and employment figures, to gain insights into the Fed’s likely course of action. Recent data has presented a mixed picture, adding to the uncertainty surrounding the central bank’s next move.

Several factors are contributing to the upward pressure on yields:

• Inflation Concerns: Despite some moderation, inflation remains above the Fed’s target, prompting vigilance.
• Strong Economic Data: Continued strength in certain sectors of the economy could embolden the Fed to maintain its hawkish stance.
• Global Monetary Policy: Actions by other central banks around the world are also influencing U.S. Treasury yields.

The bond market is expected to remain volatile as investors react to ongoing economic developments and Fed communications. Analysts suggest that yields could continue to fluctuate within a range until there is greater clarity on the future path of monetary policy.