Another Rise in Oil Prices Sends Equities Lower and Bond Yields Higher
September 10, 2026
The price of oil measured by both Brent (+5.3%) and West Texas Intermediate (+5.0% to $101 per barrel) is in triple-digit territory for the first time since mid-May. The Iranian allied Houthis scored a major tactical advantage in the Middle East war, Saudi Arabian oil production has been squeezed to a 35-year low, and the buffering effect of reduced Chinese oil imports on world energy prices is fading. In contrast to how things appeared in the first week of the war, the magnitude of America’s mistake in launching this conflict is growing vaster by the day, and the damage is spilling into financial markets.
- Ten-year sovereign debt yields climbed so far today by 11 basis points in the U.K., 10 bps in France, 9 bps in Italy, 8 bps in the United States and Spain, 6 bps in Germany and Switzerland, and 3 bps in Japan.
- Japanese intervention to support a firmer yen appears to be continuing.
- Prices for silver, gold and bitcoin fell today so far by 5.3%, 1.3% and 1.3%.
- With a drop this Thursday of more than 300 points the DOW is well on its way to extending its losing streak to four sessions for the first time since late April. Right now, the Russell 2000 sports a 0.8% drop, followed by the DOW’s loss today of 0.6% and declines of 0.5% in the S&P 500 and Nasdaq. September wobbles can be a harbinger of October market disasters as happened in 1987 and 1929.
- Among other stock markets, the ratio of losses to gains today far favors the former, including drops of 1.5% in Hong Kong, 1.3% in Indonesia, 1.0% in Australia and 0.6% in Germany.
- The dollar has lately been slipping gradually but not today, as its sails have caught the wind of refuge-seeking funds. Gains in the U.S. currency have been led by Aussie and New Zealand dollars (+0.7% and 0.5%), Indonesian rupiah (+0.5%) and Korean won and Mexican peso (+0.4%). The yen is 0.3% softer, but a mere 0.1% dip in the euro has limited the advance of the dollar’s weighted value.
Rising energy costs have also piqued political speculation. Unlike earlier moments in the Middle East war saga, President Trump has not said things or done things to arrest unwanted declines in financial assets. The mid-term Republican national 2-day convention in Dallas has trumpeted other presumed accomplishments in the president’s second term, renewed warnings of election fraud, and framed November’s election as a confidence vote in the direction that MAGA wants for the country. A rumor has been circulating that Trump may be planning to resign of a strong reaffirmation doesn’t happen in November, and his peculiar silence about rising energy prices makes sense if the rumors are in fact onto something.
Considering what has happened in September to world energy costs, today’s U.S. August producer price data release lacked what would have been needed to quell rising expectations that the Federal Open Market Committee will raise its interest rate next week. The overall 0.4% monthly price rise and acceleration of the 12-month rate of increase to 5.4% ( a 3-month high) both exceeded expectations. Core PPI inflation of 4.6% matched expectations, but the 4.7% rate of U.S. producer prices excluding food, energy and trade slightly exceeded the market consensus. CPI figures arrive tomorrow.
Central bank rate announcements today by the European Central Bank, National Bank of Serbia and Central Bank of Turkey each link policy closely to uncertainty created by the conflict between the United States and Iran.
The ECB’s trio of policy interest rates was raised by 25 basis points as markets were widely expecting. The all-important deposit rate will be 2.5%, highest since April 2025. ECB staff revised upward forecasts of average CPI inflation in 2027 and 2028. Excluding food and energy, they now predict 2.6% in 2027 (above the 2026 level) and 2.3% in 2027 (still above target). Today’s statement asserts, “The outlook remains highly uncertain, with risks to the upside for inflation and to the downside for economic growth.”
The National Bank of Serbia’s policy rate of 5.75% since a 25-basis point cut in September 2024 was again left unchanged. “Though the effects of conflict flare-up in the Middle East and rising oil prices on global inflation and economic activity have so far been less intense than initially expected, uncertainty regarding future developments is still elevated, particularly since global oil prices remain higher compared to their pre-conflict levels. One cannot rule out the possibility of а spillover of effects onto production and transportation costs at the global level, as well as on supply chains, capital flows, and consequently inflation.”
With consumer price inflation of 31.5% last month, Turkey is in a different class than either Euroland or Serbia whose latest readings were 3.3% and 1.9%. The Central Bank of Turkey’s policy interest rate had been as high as 50% in 2024 and has been 37% since a percentage point cut from 38% last January. A released statement argues that “elevated energy prices amid geopolitical developments pose an upward risk to the inflation outlook. The impact of geopolitical developments on the inflation outlook through the cost channel, economic activity and expectations is closely monitored.” Officials assert that the 37% interest rate level represents a restrictive monetary stance.
Other countries to report price data this Thursday include Germany where a 4-month high CPI inflation rate of 2.9% in August match the preliminary estimate and was associated with a July-matching 2.4%. Czech CPI inflation last month of 1.9% rose to a 3-month high from 1.7% in July, and Portuguese inflation of 3.3% represents a 4-month high. In Norway, CPI inflation of 3.3% also was at a 4-month high, whereas Danish consumer price inflation of 2.0% was its highest in nine months. Irish CPI inflation of 3.7% was a 4-month peak.
Croatia (6.2% PPI), Egypt (14.5% CPI) and Moldova (7.0% CPI) reported more elevated pricing pressure during August than the aforementioned group of economies.
Several nations released industrial production figures today, notably Spain and Italy. The July-on-July rise in Spanish output (2.3%) exceeded expectations, while Italian production was unchanged from the July 2025 level despite a 0.7% advance above June’s level.
Retail sales in India posted their first year-on-year increase (1.6%) in July since March.
The British Royal Institute of Chartered Surveyors’ monthly housing index rose 1 point to -28%.
U.S. existing home sales recorded a third straight monthly decline in August. The drop of 2.0% brought the 3-month combined decrease to 5%.
U.S. new jobless insurance claims remained historically low last week, amounting to just 206k and matching the 4-week average level.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Central Bank of Turkey, European Central Bank, National Bank of Serbia, U.S. producer prices
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