Yields Spike as Inflation Reignites on Surging Oil Prices

By May 17, hotter-than-expected CPI and PPI prints reignited rate-hike fears, pushing 10-year Treasury yields to one-year highs and pressuring rate-sensitive assets. The move follows oil’s surge above $100 per barrel since early May amid Iran conflict tensions that lifted U.S. gasoline prices over 40% to $4.50/gal. April U.S. headline CPI reached 3.8% YoY while PPI jumped 6.0% YoY; China’s producer prices also accelerated to 2.8% YoY. Despite the inflation shock, retail sales rose 0.5% in April, supported by a 2.8% jump in gas-station receipts, and the Atlanta Fed’s GDPNow model still forecasts roughly 4% Q2 growth as households maintain spending via credit.