Monday, September 28

The breakdown in US–Iran negotiations over reopening the Strait of Hormuz supplied the session’s defining shock. Brent rose 3.1% to $107.67 a barrel, while WTI reached $93.98, as traders repriced the risk to a critical oil-shipping route.

The cross-asset response was unusually broad. The S&P 500 fell 0.77%, the Nasdaq lost 0.92%, and the Philadelphia Semiconductor Index dropped 1.61%; Asian equities weakened more sharply, led by a 2.70% decline in the KOSPI. The 10-year Treasury yield rose to 5.24%, the 30-year yield touched its highest level since 2004, and the MOVE index climbed to 101.82. The dollar strengthened, while gold fell 4% to $4,148.50 and bitcoin slipped toward $83,000.

The market is treating crude’s surge less as a temporary geopolitical premium than as a threat to disinflation and future monetary easing. That combination leaves long-duration assets exposed even as it raises the prospect of weaker demand and margins.

The oil shock arrived against a backdrop of policy settings already tilted toward restraint. South Africa’s central bank raised its benchmark rate 25 basis points to 7.25%, its second increase since the Iran conflict began. Jamaica’s central bank also lifted rates, by 50 basis points to 6%, citing inflation, commodity prices, and geopolitical risks.

Japan added a separate pressure point: underlying inflation accelerated to 2.6% year over year in August from 2.3% in July, even though its composite PMI eased to 52.5. In Brazil, economists raised their 2026 inflation forecast to 4.99% and cut the growth forecast to 1.86%, while keeping the year-end Selic forecast at 13.50%.

The common implication is narrower room for rate relief. Higher energy costs are colliding with persistent domestic price pressure, making the policy trade-off more difficult even where growth indicators remain expansionary.