Bond yields were set to fall on hopes of an Iran peace deal. They rose instead, after Trump turned down Iran's offer and Iran said it would not give in.
The 10-year Treasury yield rose to 4.394% Monday. That is the rate the U.S. pays to borrow for 10 years.
The 2-year note rose with it to 3.924%, while the 30-year pushed past 4.97%.
Higher yields hurt borrowers. Bonds got cheaper, while loans got pricier for homebuyers and big firms alike.
The driver was bad timing. War risk and price risk hit in the same hour, with oil back near $97 a barrel and the April CPI print due Tuesday.
The Iran war is now in week ten. Last week's brief peace rally now looks more like a head fake.
Bond traders price in long wars by asking for more interest. That is just what they did on Monday morning.
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Top-line CPI is set to rise to 3.7% from 3.3%. Core CPI - which strips out food and gas - should tick up to 2.7%.
Both sit well above the Fed's 2% target. The print drops at 8:30 a.m. ET Tuesday.
Wolfe Research's Stephanie Roth flagged a quirk worth knowing. Rent in the CPI got bent by the October 2025 government shutdown, and that bend is now reversing.
So core CPI could jump for a one-time reason. Roth is also watching jet fuel costs in airfares, plus used car prices for a rebound.
For investors, the question is simple. Is one hot print enough to stop the Fed from cutting rates?
The bond market is voting no.
The job market is doing the Fed's work in the meantime. April hires came in at 115,000 - well above the 55,000 most experts called for. The jobless rate held at 4.3%.
Chicago Fed chief Austan Goolsbee called the job market "stable without being good." That kind of line keeps the Fed slow on rate cuts.
For investors, the playbook gets tricky. Hot CPI plus a stable job market plus war risk in oil is a mix that pushes yields up. That makes stocks, real estate, and growth bets harder.
The Fed has hinted at rate cuts later this year. But the market has trimmed those odds in the past week.
Watch Tuesday's CPI print and Trump's meet with Xi Jinping in Beijing later this week. Both could move yields hard in either way. The April CPI print drops at 8:30 a.m. ET, with the Trump-Xi summit set for the back half of the week.
Watch oil too. A move past $100 a barrel on the front-month WTI would push yields higher still.
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