International oil prices have surpassed $100 per barrel, while U.S. Treasury yields have reached their highest level in over three years. Concerns over oil supply from the Middle East and worries about the U.S. Treasury market have led to declines in both U.S. and European stock markets.
According to the International Financial Center, Brent crude closed at $101.21 per barrel on September 9, marking a 3.36% increase from the previous trading day. Ongoing military clashes between the U.S. and Iran have reignited fears of supply disruptions. President Donald Trump indicated that the escalation of war and rising energy prices may only stabilize after the midterm elections.
As high oil prices increase inflationary pressures, the U.S. government's measures to stabilize the Treasury market have fallen short of expectations. The Treasury Department expanded its bond buyback program to $6 billion, three times the previous amount, but market reactions suggest this is insufficient. Consequently, the yield on the 10-year Treasury note rose by 5 basis points to 4.84%, the highest level since November 2023.
The simultaneous rise in oil prices and Treasury yields has put pressure on the stock market. The S&P 500 index fell by 0.48%, while the Stoxx 600 index in Europe dropped by 1.41%. The volatility index (VIX), which reflects market anxiety, increased by 4.71%.
If high oil prices persist, central banks in major economies may face greater challenges in their policy decisions. Rising energy prices could reignite inflation, making it difficult to lower interest rates, while increased fiscal debt and Treasury yield pressures may hinder governments from expanding spending to stimulate the economy.
Market participants are also growing cautious ahead of the upcoming Federal Open Market Committee (FOMC) meeting. A Reuters survey indicated that 70% of economists expect interest rates to remain unchanged, although some argue that the Federal Reserve may need to raise rates to demonstrate its commitment to price stability. For the time being, international financial markets are expected to react sensitively to oil price movements driven by Middle Eastern tensions, U.S. inflation indicators, and the Fed's policy decisions.
* This article has been translated by AI.
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