U.S. Treasury yields increased as peace talks between the United States and Iran showed signs of stalling, raising concerns about rising energy costs and potential inflation. According to Jin10, the sell-off on Monday led to a rise in yields in the $31 trillion U.S. Treasury market, with the 10-year Treasury yield climbing approximately 6 basis points to nearly 4.5%, while crude oil prices surged over 7%. The two-year Treasury yield, which is most sensitive to Federal Reserve policy expectations, also rose about 6 basis points to 4.07%. This development followed Iran's decision to suspend indirect talks with the U.S. in protest of Israeli actions. Traders have increased their expectations that the Federal Reserve's next move will be a rate hike. The swap market indicates that traders have fully priced in a rate hike by March 2027, with a 50% chance of a hike as early as October.