Treasuries recover from oil-driven selloff as inflation gauge slows

US Treasuries found their footing after weeks of turbulence, with bond prices stabilizing as a key inflation gauge came in softer than Wall Street had braced for. The recovery marks a notable shift from the aggressive selloff that gripped fixed income markets when oil prices surged on Middle East tensions.

The headline CPI number for April 2026 still looked ugly: 3.8% year-over-year, up from 3.3% in March. But peel back the energy layer, and the picture gets more interesting. Core CPI, which strips out volatile food and energy costs, held at 2.8%. That’s the number the bond market actually cared about, and it was enough to stop the bleeding.

How oil broke the bond market (temporarily)

The selloff that preceded this recovery wasn’t subtle. Geopolitical tensions centered on Iran and potential disruptions around the Strait of Hormuz pushed Brent crude above $100 per barrel for the first time in four years. Energy costs in the April CPI report jumped 17.9%, a figure that looks more like a commodity crisis than a normal monthly reading.

That oil shock rippled straight into Treasuries. The 10-year yield climbed above 4.5%, hitting levels not seen since early 2025. The 30-year yield briefly topped 5%.

The selling wasn’t confined to the US either. Global bond markets joined the rout, with Japanese government bond yields hitting record highs across several maturities.

The core number that calmed things down

Core CPI at 2.8% told a different story than the headline 3.8% figure. It suggested that underlying price pressures, the kind that actually influence Fed policy, weren’t accelerating at the same pace.

Markets had already been revising their rate cut expectations downward as inflation risks mounted. The softer core reading didn’t reverse those expectations entirely, but it did pump the brakes on the most hawkish scenarios. Treasuries stabilized, yields eased back from their peaks.

Oil prices retreating from their highs helped too. Brent pulled back from above $100, though it remained elevated compared to levels seen earlier in the year.

What this means for crypto investors

During the worst of the selloff, Bitcoin was trading below $80,000, a level that reflected the broader risk-off mood across markets. The correlation between rising yields and Bitcoin weakness has become one of the more reliable patterns in crypto’s increasingly macro-sensitive trading environment.

When a 10-year Treasury offers 4.5% with essentially zero credit risk, the opportunity cost of holding a non-yielding, volatile asset like Bitcoin goes up. Institutional allocators notice this math immediately.

With markets pricing in fewer rate cuts, the monetary policy tailwind that crypto bulls have been counting on keeps getting pushed further into the future. Every month that cuts get delayed is another month where traditional fixed income competes aggressively with digital assets for institutional capital.

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