NEW YORK — The U.S. 2-year Treasury yield reached a 14-month peak of 4.5961 percent on Friday, surging 12 basis points Thursday as markets sharpened bets on a Federal Reserve rate hike this month. The move reflects a brutal calculus: oil-driven inflation fears colliding with a Fed still in tightening mode.

Brent crude hit a four-month high of $109.97 a barrel, fueled by a 6 percent jump the previous day. Though Brent fell nearly 2 percent to $105.90 on Friday, it was tracking for a weekly gain of roughly 10 percent. The driver: geopolitical supply constraints. Attacks between the U.S. and Iran have restricted flows through the Strait of Hormuz, while Iran-aligned Houthi forces seized Yemen's port of Mocha, threatening Saudi oil shipments through the Red Sea.

The 10-year yield remained largely flat on Friday at 4.946 percent after earlier touching 4.979 percent—its highest level in nearly three years. The 30-year hit a new 19-year high of 5.3836 percent before retreating to 5.359 percent. The curve's steepness reflects the market's conviction that rate cuts are nowhere near.

Futures markets assigned a 67 percent probability to a Fed rate hike this month. Gustav Helgesson, macro strategist at SEB, said markets are now pricing in "higher rates for longer." He added that the upcoming August consumer price data—due Friday—carries weight beyond the usual: "it definitely feels like this one is." Forecasts center on a 0.2 percent monthly rise in core CPI, though overnight producer price data suggests upside risk.

Thursday's bond selloff was compounded by a Treasury buyback program that underperformed, falling short of its $6 billion target.

Global yields are moving in lockstep. The 10-year German Bund yield rose 1 basis point for the day and 17 basis points for the week—its largest weekly move since March. JPMorgan analysts now expect eight of nine developed-market central banks to raise rates by year-end, including the Federal Reserve, Bank of Japan, all four European central banks, and the reserve banks of Australia and New Zealand. While that tightening is expected to remain shallow, JPMorgan sees risks tilted toward more aggressive action given resilient global growth and persistent core inflation.