(Bloomberg) -- The rout in US government debt eased on Tuesday after longer-dated yields reached the highest levels since late July and oil prices fell.

With inflation data later in the week expected to enable additional Federal Reserve interest-rate cuts this year, short-dated yields most sensitive to changes in Fed policy declined slightly. The monthly auction of three-year notes drew middling demand despite offering the highest yield since July.

Longer-dated yields were little changed to higher on the day after the 10- and 30-year touched the highest levels since July 31 earlier in the session.

Yields across maturities soared at the end of last week when strong jobs data annihilated expectations for another half-point Fed rate cut. A surge in oil prices on Middle East warfare stalled Tuesday as expectations that China would announce new stimulus measures withered. Now investors are looking ahead to Thursday’s consumer prices data, which are expected to show deceleration.

“Rates investors do believe a more proactive Fed today means a better economy tomorrow,” warranting higher long-term yields, Mark Cabana, head of US rates strategy at Bank of America, told Bloomberg Television. Still, a 10-year yield in the 4% to 4.25% range presents a buying opportunity as the Fed “is almost certainly going to cut to 4% regardless of the data.”

In the meantime though, the Treasury Department’s auctions of three- and 10-year notes and 30-year bonds from Tuesday to Thursday may render investors cautious. The $58 billion three-year auction at 1 p.m. New York time drew 3.878%, about a basis point higher than its yield in pre-auction trading, a sign demand fell short of expectations.

Traders are wagering on around 50 basis points of easing from the US central bank by the end of the year, with less than 150 basis points of easing priced in through October 2025. That’s down from expectations for about 200 basis points of reductions in late September.

US bonds tumbled on Monday, hoisting key yields above the level of 4% last seen in August. The scaling-back of Fed expectations poured cold water on a bond-buying frenzy that helped Treasuries clock five straight monthly gains.

“The market did get a bit ahead of itself in pricing Fed cuts,” said Patrick Armstrong, chief investment officer at Plurimi Wealth on Bloomberg TV. “I do think in 2025 inflation will likely become a problem again.”