Yields mixed on oil supply risks. The yield curve steepened today as oil prices climbed on the possibility that President Trump’s Russian diesel deal gets blocked by US lawmakers, with front-end yields inching lower while long-end yields climbed. The 2-year yield closed 3 bps lower at 4.71% (down 8 bps on the week), while the 10-year yield closed 2 bps higher at 5.07% (down 17 bps on the week). WTI crude rose 3.56% today, closing at $101.46 per barrel. Meanwhile, equities slid as AI concerns lingered, with the S&P 500 and NASDAQ closing 1.09% and 2.14% lower, respectively.
Fed Chair reiterates commitment to price stability. Fed Chair Warsh today spoke at the International Monetary Fund’s annual meetings, reaffirming the Fed’s commitment to bring down inflation. He said, “We made very clear that we would deliver price stability, and we removed a dose of accommodation about a month ago.” Warsh did not provide any insight into his view on the Fed’s next steps, saying, “I don’t believe in saying now what I might do at the meetings that we have in the balance of this year.” Futures markets currently see an October rate hike as ~17% likely, compared to ~27% yesterday.
Iran proposes seven-day plan to reopen Hormuz. Saeed Khatibzadeh, a deputy at Iran’s Ministry of Foreign Affairs, said on Telegram that Tehran had presented “a complete, actionable proposal – covering a period of just 7 days – for opening the Strait of Hormuz.” It is unclear whether the details are similar to the proposal presented at the United Nations a few weeks ago, which President Trump rejected. A spokesman for the Iranian army, Mohammad Akraminia, elaborated that the Strait would reopen only if “the United States leaves the region,” adding, “If it does not leave, we will expel it.” Separately, Iranian President Masoud Pezeshkian denied wanting nuclear capabilities, stating “Iran is not seeking nuclear weapons” and “we have always been ready for dialogue.”