The yields on U.S. Treasury bonds surged Wednesday as oil prices also climbed.
asserted
prices → surge → bonds
The 10-year Treasury yield, which heavily influences consumer borrowing rates such as mortgages, rose as high as 5.08%, its highest level since June 2007.
asserted
which → influence → June
The 30-year Treasury yield hit 5.38%, also a level not seen since before the global financial crisis nearly two decades ago.
asserted
yield → hit → crisis
European Brent oil rose to more than $101 per barrel, while U.S. crude oil jumped to nearly $92.
asserted
oil → rise → 92
Rising oil prices often translate into rising bond yields due to the effect that higher energy costs can have on inflation.
asserted
costs → rise → inflation
On Tuesday, President Donald Trump had said that U.S. officials were communicating with Iranian representatives at the U.N. General Assembly, driving down oil prices and giving some optimism to markets about potentially ending the Iran war, now in its seventh month.
asserted
officials → say → month
But that hope quickly faded.
asserted
hope → fade → ?
A readout of the U.S.-Iran discussions later Tuesday from U.S. special envoy Steve Witkoff on social media said that the talks were “lengthy,” but that there was still more work to be done, and the “mediators will continue their work.”
asserted
mediators → say → work
Then, Wednesday morning, the U.K. maritime trade monitoring agency reported that a cargo vessel had been “stuck by an unknown projectile” in the Strait of Hormuz, a critical chokepoint for global energy supplies, which has remained at a near standstill for months as a result of the Iran war.
asserted
which → report → war
Trump also unsettled energy prices when he said Tuesday that he supported a ban on U.S. exports of diesel fuel.
asserted
he → unsettle → fuel
“I’ve said ‘Let’s not send out the diesel,’” Trump said to reporters at the U.N.
asserted
Trump → say → U.N.
“I’ve called for it within my people.
asserted
I → call → people
I’ve been talking about it.”
asserted
I → talk → it
The energy industry on Wednesday warned that a ban on exports would spell even higher prices for Americans.
asserted
ban → warn → Americans
“Removing U.S. diesel from the market could instead result in reduced refinery runs, global economic damage and even higher U.S. prices,” the American Petroleum Institute said.
uncertain
Institute → remove → runs
Energy Secretary Chris Wright also said a ban would not help to bring down prices.
asserted
ban → say → prices
“The blunt tool of banning diesel exports definitely doesn’t work,” he said Wednesday morning, according to Reuters.
uncertain
he → ban → Reuters
Benchmark diesel futures surged as much 7% in European trade after Trump’s remarks.
asserted
futures → surge → remarks
On top of rising energy prices, fresh economic data points also helped propel Treasury yields higher.
asserted
points → rise → yields
“US business activity growth accelerated for a fourth successive month in September to reach the fastest rate for over five years,” S&P Global reported in its latest purchasing managers index reading.
“Firms’ input costs have meanwhile jumped in September at the steepest rate for four years, with fuel and transport costs spiking higher thanks to the rise in oil prices seen during the month, which will add further to the upward pressure on selling prices and inflation in the coming months,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
asserted
Williamson → accelerate → Intelligence
Stocks fell as a result of the moves in yields and oil prices.
asserted
Stocks → fall → yields
As of midday, the Nasdaq Composite index had tumbled 1% and the S&P 500 had fallen 0.6%.
asserted
S&P → tumble → midday
The Dow declined 270 points.
asserted
Dow → decline → ?
The S&P utilities sector, which contains many companies involved in the widespread buildout of data centers, was the biggest sector loser Wednesday.
asserted
which → contain → centers
Higher interest rates could potentially add billions of dollars of costs to building AI infrastructure.
uncertain
rates → add → infrastructure
As a result of the rise in the 10-year yield, the average 30-year fixed rate mortgage currently sits at 7.17%, according to Mortgage News Daily.
uncertain
mortgage → fix → Daily
The Aporia
