Oil Tops $109, Treasury Yields Near 5% on Iran War — SkimNews
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- Brent crude surged to $109.97 a barrel (four-month high), up 6% overnight and nearly 13% on the week, as US-Iran fighting restricted Strait of Hormuz flows and Iran-aligned Houthis seized Yemen's port of Mocha threatening Saudi oil exports through the Red Sea.
- US Treasury yields spiked to multi-year highs — the 10-year climbed to 4.9708% (three-year peak, just shy of 5%) and the 30-year hit 5.3803% (19-year high) — as markets priced a 70% probability the Federal Reserve raises rates this month, with the US bond rout partly worsened by a Treasury buyback programme that fell short of the expected $6 billion.
- Asian equities slumped sharply, with Japan's Nikkei tumbling 2.8%, the MSCI Asia-Pacific ex-Japan index losing 1.8%, Hong Kong's Hang Seng dropping 1.5%, and Chinese blue-chips falling 1.2% as rising bond yields raised discount rates used for corporate valuations.
- JPMorgan analysts now expect eight of nine developed-market central banks to hike rates by year-end, citing resilient growth, sticky core inflation, and commodity price pressures; the European Central Bank raised rates overnight for the second time this year with officials signaling more tightening ahead.
- RBC Capital Markets head of global commodity strategy Helima Croft warned Brent could climb to $121.99 a barrel later this year if a full-blown Saudi-Houthi war resumes, calling maritime traffic through the Bab el-Mandeb "gravely imperiled."
- August US CPI data due later Friday is seen as make-or-break for a Fed rate hike next week, with forecasts centered on a 0.2% monthly rise in core inflation but risks tilted higher after overnight PPI data showed stickiness.
Why it matters: With 30-year Treasury yields hitting a 19-year peak of 5.38%, the $40 trillion US government debt faces sharply higher borrowing costs, while higher long yields are already lifting mortgage rates and hamstringing the housing market. Eight of nine developed-market central banks are now expected to tighten — meaning the Iran war's spillover into energy and inflation is rewriting rate expectations across the global economy just as Friday's CPI print could lock in a Fed hike next week.
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