An oil spike that lasted a few hours pushed Treasury yields to a 19-year high

Donald Trump rejected Iran's offer to reopen the Strait of Hormuz within seven days. Tehran wanted the naval blockade lifted, its frozen assets released and the war ended on all fronts in return. Brent crude ran as high as US$108.83 a barrel.

The spike did not survive the session. Brent settled at US$105.28, up 96 US cents on the day. West Texas Intermediate added 19 cents to US$92.60. Reports that Saudi Arabia is restarting its repaired East-West pipeline took the urgency out of the morning.

The bond market kept the fear anyway. Oil feeds the petrol price, petrol feeds the inflation numbers, and the inflation numbers are what the Federal Reserve is reading. Traders spent Monday moving towards an October rise as the likelier outcome.

Chart: The ten-year US Treasury yield closed at 5.17% on 25 September, up from 4.26% in April. US Treasury yields at each week's last close, 17 April to 25 September 2026, in percent. Monday's rise after the oil spike is in the story. — This story’s chart of the day: the numbers, the dark version and the animated version are on its own page. The chart’s page →

Shares came off their lows around midday, when CNN and Axios reported that White House officials expect talks to resume this week. Trump said Tehran had overplayed its hand. The Dow still finished 347 points lower.

Our view

the oil price came back and the yield did not. I'd want to see a week of Brent under US$100 before believing the bond market has stopped pricing a fuel-driven inflation problem.

This story ran in The Yield Did It Tuesday 29 September’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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Tuesday 10 November An $8 billion Iranian proposal reached the White House and took another 4% off oil
Monday 9 November Energy stocks had their worst week since April 2025 as the war premium drained out of oil
Tuesday 3 November Oil fell more than 7% because Iran and the United States started talking

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