Brent Nears $110 as 10-Year Treasury Yield Tops 5%
The benchmark 10-year US Treasury yield briefly cleared 5% for the first time since 2023 on Monday as spiking oil prices threatened to spill into debt markets, according to Fortune.
Brent crude jumped as much as 4% to nearly $110 a barrel, its highest level since May, Fortune reported. The 10-year rate has climbed more than 100 basis points since just before the Iran war began in late February, when it stood below 4%, per the same reporting.
Supply disruptions are compounding the price pressure. Iran-backed Houthi rebels have seized control of the Bab al-Mandab Strait, a vital bypass for Saudi oil around the Strait of Hormuz, according to Fortune. A drone attack has also shut down Saudi Arabia's East-West Pipeline, which had diverted much of the kingdom's crude from the Persian Gulf to the Red Sea, the outlet reported.
With tanker traffic through the Strait of Hormuz still well below prewar levels, US oil reserves are being drawn down further from what Fortune describes as their lowest level in more than 40 years.
The Globe and Mail reported that markets on Monday were pricing in 90% odds that the US Federal Reserve will announce a rate hike at its Federal Open Market Committee meeting on Wednesday.
Sources
- Spiking oil prices jolt U.S. bond yields past 5%, threatening to set off a vicious cycle of debt just as the Fed is expected to hike rates | Fortune (opens in a new tab) - Event Registry
- Spiking oil prices jolt U.S. bond yields past 5%, threatening to set off a vicious cycle of debt just as the Fed is expected to hike rates (opens in a new tab) - Event Registry
- U.S. benchmark bond yield breaches 5% as oil, inflation worries mount (opens in a new tab) - Event Registry