From New York Post · · 1m 30s
Bond yields hit a 19-year high as oil tops $105
Record diesel prices and a Middle East war have Wall Street betting the Fed raises rates on Wednesday for the first time in three years.
In brief
Record diesel prices and a Middle East war have Wall Street betting the Fed raises rates on Wednesday for the first time in three years. Energy shocks from the Iran war are pushing inflation fears into bond yields, so borrowing costs for mortgages, cars and businesses are rising even before the Fed moves. Originally…
Yields at a 2007 high
The 10-year Treasury yield touched 5.041% on Tuesday, its highest in 19 years, before settling near 5% as traders bet on a Fed rate hike.
Diesel is doing the damage
Diesel hit a record $6.27 a gallon amid the Iran war. Most food and clothing moves by truck, so economists warn those costs spread across the economy.
Oil climbs, stocks slide
Brent crude jumped 2.9% to $108.76 on fears that supply through the Strait of Hormuz stays disrupted. The Dow fell 465 points and the Nasdaq lost 0.8%.
Borrowing gets more expensive
The 30-year yield rose to 5.368% and the 2-year to 4.665%. Higher yields push up rates on mortgages, auto loans and business loans, making affordability worse.
A hike looks almost certain
Markets see a 94% chance of a quarter point hike to 3.75% to 4%, the first in three years. Morgan Stanley and Goldman Sachs, the last holdouts, now expect at least two.
A divided Fed decides
White House adviser Kevin Hassett argued inflation is cooling. Under Chair Kevin Warsh, officials are split on whether hiking now is too soon or already too late.
“But again, we respect the decision that the Fed makes.”
The headline
Energy shocks from the Iran war are pushing inflation fears into bond yields, so borrowing costs for mortgages, cars and businesses are rising even before the Fed moves.
/file/attachments/2999/41_389608.png)
/file/attachments/orphans/DMXCREATIONAFRICAROLLOUT-POST9-BIO_471227.png)
