U.S. Treasury yields climbed on Monday, pushing the 2-year yield to its highest since early last year, as investors looked ahead to key inflation data due to be released Thursday and weighed the latest developments in the U.S.-Iran war negotiations.

The 2-year Treasury note yield, which closely tracks short-term Federal Reserve interest rate policy, was more than 4 basis points higher at 4.226%. It hit its highest level since Feb. 21, 2025 when it yielded as high as 4.275%.

The yield on the 10-year U.S. Treasury note — the key benchmark used to price mortgages, auto loans and credit card debt — rose more than 5 basis points to 4.509%. The longer-dated 30-year Treasury bond yield rose more than 4 basis points to 4.949%.

One basis point equals 0.01%, and yields and prices move in opposite directions.

Weaker bond prices came after the U.S. and Iran agreed on a roadmap to reach a deal within 60 days that would end the war. But President Trump also threatened further military action against Iran, which said it had once again closed the Strait of Hormuz.

Crude prices gyrated, with Brent trading more than 3% lower — giving up an earlier gain — to trade around $77 per barrel. WTI futures were down more than 2% to $74 a barrel.

A key test for the fixed income market comes later this week, when May's reading on the personal consumption expenditures price index, the Fed's preferred inflation gauge, is released Thursday. Excluding volatile food and energy prices, core PCE is expected to increase from April, according to economists polled by FactSet.

Last week's Fed meeting, which proved more hawkish than many market watchers had expected, saw expectations for interest rate hikes pulled forward, possibly to as soon as September.

Last Wednesday, Kevin Warsh's first gathering as Federal Reserve chairman ended with a more hawkish bias toward interest rates from the 12 voting members of the Federal Open Market Committee, and a nod to possible future rate hikes. The meeting saw the committee remove key language from a dramatically shorter policy statement that had previously indicated a bias toward future rate cuts.

The Fed last week kept the benchmark federal funds rate unchanged at 3.5%-3.75%.