Monday, September 21, 2026
The ten-year Treasury settled at 5 percent on Tuesday, its highest since 2007. On Wednesday it fell, equity futures rose across the board, Brent gave up about 5 percent and gold dropped $35. A rate rise is supposed to make risk more expensive. This one was received as insurance against something worse.
The Federal Open Market Committee raised its target range a quarter point to 3.75 to 4 percent on Wednesday, its first increase since 2023, on a 12-0 vote. The statement says inflation remains elevated and promises the Committee "will deliver price stability." Twelve of eighteen officials expect another increase this year.
On Monday the 10-year Treasury yield touched 5 percent for the first time since 2023. Brent neared $110 before settling back. Diesel set a record at $6.23 a gallon. Chip stocks fell almost 6 percent. By the close, markets put the odds of a Federal Reserve rate increase on Wednesday above 90 percent. Each of those has its own story. Together they describe one: the end of the assumption that the shocks of this year would pass on their own.
Speaking at his golf resort in Ireland on Sunday, President Trump said the US would ultimately leave Iran "unless we decide to stay and keep the oil like Venezuela," and that gasoline prices would "drop like a rock" when the war ends. The two statements point in opposite directions. One describes a withdrawal. The other describes an occupation of the world's most contested oil infrastructure.
Saudi Arabia shut its East-West pipeline after drone attacks last week, closing the main route its oil had used to avoid the Strait of Hormuz. Over the weekend the Houthis took Perim Island and with it control of the Bab al-Mandab, the strait that cargoes loaded at the pipeline's Red Sea terminal must pass to reach Asia. Brent rose toward $108 on Monday.
Brent settled near $108, the highest in nearly four months. West Texas Intermediate rose above $104 after surging almost 7 percent, closing above $102 for the first time since May. This desk asked yesterday whether traders would price the president's stated end date. They have answered, and the answer is no.
Brent closed above $100 on Wednesday for the first time since May, and the same afternoon the US president said the war would end immediately after the 3 November election. A forward curve pricing an open-ended disruption has to guess at duration. It has now been given a date to disagree with, which is not the same as being given the truth.
Donald Trump told reporters on Wednesday that the war with Iran "is going to end immediately after the election" on 3 November, and that Washington is no longer seeking a negotiated end. When the party most able to stop a war names the week it will stop, everyone else stops planning for an outcome and starts planning for a date.
Fed funds futures put the chance of a quarter-point rise at the September meeting at about 59 percent. Three months ago the same market was arguing about the size of a cut. Brent above $100 and the ten-year at its highest close since 2023 are the reason, and an energy shock is the one shock a central bank cannot fix.
American forces struck further Iranian tankers, and attacks have been reported on Saudi oil facilities. Brent passed $100. For a year this conflict was fought over a waterway and the vessels crossing it. Hitting production and export infrastructure is a different category of target, and it does not reverse.
A head of state posted an AI-generated video of explosions at the world's most important oil export terminal. There was no other evidence of an attack. For anyone pricing oil, the question is no longer whether it happened but what it costs to find out.
When Suez closed, ships went around Africa. It cost more and took longer, and it worked. The Gulf offers no equivalent, which is why traffic through Hormuz has fallen by most of itself rather than moved somewhere else.