Finance

Oil prices jumped significantly, with West Texas Intermediate crossing above $102 a barrel and Brent crude settling over $107 a barrel, marking their highest finishes since May. The sharp rally was triggered by intensified military clashes between the U.S. and Iran near the strategic Strait of Hormuz. Investors fear that these disruptions to the global flow of crude will further exacerbate persistent inflation.

The 10-year U.S. Treasury yield advanced to 4.95%, hovering at its highest level since late 2023, while the 30-year yield reached levels not seen since 2004. Fixed-income markets faced intense selling pressure following a Producer Price Index report that showed wholesale inflation grew by 0.4% in August. This hotter macroeconomic data has caused market participants to significantly increase their bets on a Federal Reserve interest rate hike.

Gold and silver prices both experienced sharp drops, with gold falling back below the $4,400 per troy ounce threshold and silver tumbling roughly 6%. Although precious metals typically act as hedges against inflation, surging energy costs have heightened expectations that the Federal Reserve will raise its benchmark interest rate. The prospect of higher interest rates has reduced the appeal of non-yielding assets, putting a lid on recent commodity rallies.