U.S. 10-year Treasury yields remained near multiyear highs on Friday as bond markets digested the latest consumer price index report for August.

Odds that the Federal Reserve will raise interest rates by a quarter percentage point at its policy meeting next week surged to approximately 86%, up from roughly 72% on Thursday.

Those probabilities were based on trading in 30-day fed funds futures at the Chicago Mercantile Exchange, reflecting a sharp shift in market sentiment following the inflation data.

The 2-year Treasury note yield, the most sensitive to short-term Federal Reserve policy, rose 7.8 basis points to 4.628%, touching its highest level since July 2024.

The 10-year U.S. Treasury note yield, which influences mortgages, auto loans, and credit card debt, gained 2.9 basis points to 4.97%, after earlier reaching 4.992%, its highest level since October 2023.

The longer-dated 30-year Treasury bond yield, which is more sensitive to geopolitical risks, was little changed on the day, holding at 5.356%.

The consumer price index rose a seasonally adjusted 0.4% in August, placing the 12-month increase at 3.4%, according to the Bureau of Labor Statistics, matching the Dow Jones consensus estimate.

Both readings remained well above the Federal Reserve’s 2% inflation target, maintaining pressure on policymakers heading into next week’s rate decision.

Stripping out volatile food and energy prices, so-called “core” CPI posted a 0.3% monthly gain, or 0.1 percentage point higher than economists had forecast, while the core annual rate came in at 2.4%, in line with Wall Street’s consensus.

The August CPI report is the final major inflation indicator the Fed will review before its policy meeting concludes next Wednesday with a vote on its benchmark interest rate, which currently stands at 3.50% to 3.75%.

Treasurys suffered a sharp sell-off on Thursday as U.S. oil prices topped $100 a barrel amid further escalation in the Middle East, adding to bond market pressure.

The Treasury Department also bought back approximately $5.2 billion in off-the-run 10-year notes and 20-year bonds on Thursday, roughly half of the $10.5 billion offered, amplifying selling pressure across the bond market.

The 10-year note yield jumped 11 basis points during Thursday’s session, touching 4.954%, its highest level since October 2023.

August’s wholesale inflation report, also released Thursday, showed prices rose 0.4% last month, in line with consensus estimates, while core wholesale inflation rose a more modest 0.2%, below forecasts of 0.3%.

Oil prices pulled back on Friday, with West Texas Intermediate futures dropping 2.4% to settle at $100.05 per barrel and Brent crude futures sliding 2.8% to $104.61 per barrel.