Treasury yields climbed to new two-and-a-half-year highs today. There was no single, strong catalyst, just a depressing melange of rising European bond yields, rising oil and commodity prices, and the knowledge that the

Fed

is likely to hike interest rates at least a couple of times in the months ahead.

The benchmark 30-year Treasury bond finished the day down 22/32 at 92 2/32, lifting its yield 5.8 basis points to 6.748%, a level it hasn't closed above since June 1997. Shorter-maturity note yields rose by similar amounts, with the 10-year note actually closing at a higher yield than the long bond (6.762%) for the first time since June 1990.

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There were no major economic releases on the calendar, just the

Housing Market Index

, which dropped to 71 in January from 72 in December. It peaked in November 1998 at 78. Rising interest rates have stalled all measures of housing-sector performance.

More influential, obviously, were big selloffs in the European bond markets overnight, which lifted yields on most 10-year benchmarks by about 10 basis points. That forces Treasury yields higher because investors shift out of Treasuries and into the discounted European issues.

Also, oil prices rose sharply, threatening higher inflation more broadly and giving a big boost to a key commodity price index. Crude oil for February delivery, the benchmark, traded as high as $29 a barrel on the

New York Mercantile Exchange

before ending up $0.83 at $28.85. Cold weather in the Northeast and expectations that

OPEC

will prolong production cuts implemented last year are behind the latest move up, which started last week.

Oil helped propel the

Bridge Commodity Research Bureau Index

to its highest close since October, 209.30, another possible harbinger of higher inflation generally. (Rising grain prices have also contributed strongly to the CRB's sharp rise in the last week.)

Nothing really changed on the Fed front today: Bond traders and investors remain convinced that the Fed will hike rates at least once and probably twice in the next several months, and they are eagerly awaiting the statement that comes out of its Feb. 1-2 meeting for an indication of what the monetary policymakers are thinking.

Even so, that dynamic -- the expectation of an uncertain number of interest-rate hikes -- explains today's action as much as anything does, market watchers say. It's that dynamic that is responsible for the fact that no one wants to buy bonds, and it's the fact that no one wants to buy bonds that makes the market sag when faced with even a small amount of selling pressure, as was the case today.

Or as Kevin Logan, senior market economist at

Dresdner Kleinwort Benson

, puts it, "It doesn't take much in the way of selling to push the market lower when there's nobody to take the other side."

The bond market might see little rallies here and there, as people either "buy the dip for a trade," or put small amounts of cash to work. But as long as everyone is still waiting for the Fed to take action -- and for consumer spending to slow, confirming that higher interest rates are making a difference to the economy -- "it's hard to be an aggressive buyer of bonds," Logan said.