Finance
Oil Holds Near 100, the 10 Year Nears 5 Percent, and Next Week Brings the Fed Call
Markets head into next week's September 15 and 16 Federal Reserve meeting with energy prices and bond yields doing most of the talking. WTI crude pressed toward 100 dollars a barrel this week to multi month highs on the expanding conflict between the United States and Iran and the resulting oil supply squeeze, while Brent climbed past 100 dollars toward 108 dollars. Friday brought some profit taking, with both benchmarks easing, but the International Energy Agency said prices at this level start to dent consumption.
Bond yields are telling a similar story. The 10 year Treasury yield touched around 4.94 percent, its highest in about three years, and the 30 year yield pushed to multi year highs after Friday's CPI data. The two year yield, which tracks Fed expectations most closely, climbed to its highest in more than two years. The move went global, the European Central Bank raised rates by 25 basis points to 2.5 percent on September 10. Economists were split on the path ahead, while futures markets priced in further hikes into next year.
Friday's August CPI report was the week's main event, and it came with a twist. Headline inflation held at 3.4 percent compared with a year earlier, exactly as forecast, but the hotter than expected 0.3 percent core reading traced back largely to one quirky category, a record monthly jump of about 1.5 percent in telephone services. Bank of America attributed it to AT&T retiring old unlimited plans and raising administrative fees, calling the effects temporary and likely to unwind in coming months. Analysts estimated wireless services added about 10 basis points to core. Beneath the quirk, the annual core rate cooled to 2.4 percent, its slowest pace since February 2021.
The rest of the data painted a mixed but strengthening picture. Employers added 162,000 jobs in August, roughly triple the 56,000 analysts had expected, which strengthened the case for a hike. University of Michigan consumer sentiment slipped to 47.8 in September from 51.7, while one year inflation expectations jumped to 4.6 percent from 4 percent, with survey director Joanne Hsu pointing to resurgent fuel prices and trade tensions. Administration officials argued rising yields are a global phenomenon tied to oil prices, while the White House said President Trump, who has pushed publicly for rate cuts, would weigh in on a Fed hike while respecting the central bank's independence.
Stocks took the news in stride. The S&P 500, Nasdaq, and Dow each rose more than 1 percent on Friday, and crypto related stocks bounced hard, Coinbase gained 4.4 percent, Circle added 3.3 percent, Strategy rose 4.3 percent, and Gemini climbed 6.2 percent. Traders now price about an 85 percent chance of a quarter point Fed move next week, shifting the debate from whether the Fed moves to how many moves this cycle ultimately brings, with markets pricing in a chance of further tightening later in the fall.
For readers, the practical read is straightforward. Mortgage rates already touched 2026 peaks this week, and next Wednesday's decision sets the tone for borrowing costs into year end. Energy prices remain the wild card, if oil holds near triple digits, inflation stays sticky and the Fed stays hawkish; if it eases, the quirky phone bill print that pushed core higher could fade into a footnote. Watch Wednesday's announcement, then the October meeting, for the next signal.
Quick answers
What is this story about?
Markets head into next week's September 15 and 16 Federal Reserve meeting with energy prices and bond yields doing most of the talking. WTI crude pressed toward 100 dollars a barrel this week to multi month highs on the expanding conflict between the United States and Iran and the resulting oil supply squeeze, while Brent climbed past 100 dollars toward 108 dollars. Friday brought some profit taking, with both benchmarks easing, but the International Energy Agency said prices at this level start to dent consumption.
Why does this story matter?
For readers, the practical read is straightforward. Mortgage rates already touched 2026 peaks this week, and next Wednesday's decision sets the tone for borrowing costs into year end. Energy prices remain the wild card, if oil holds near triple digits, inflation stays sticky and the Fed stays hawkish; if it eases, the quirky phone bill print that pushed core higher could fade into a footnote. Watch Wednesday's announcement, then the October meeting, for the next signal.
Sources
- Reuters: Fed seen likely to raise rates next week after inflation report
- CoinDesk: Live updates on oil, bond yields, Bitcoin and the CPI
- Morningstar: US Inflation Data Could Decide Timing of Federal Reserve Rate Hike
New to crypto? Read the crypto glossary, browse frequent questions, read our story, or explore the story archive.