Tehran Threats to Escalate War Propel Oil, Send 30-Year Yield To Highest Level Since ’04: Sept. 24, 2026

Tehran’s threats of expanding the war to the Indian Ocean are sparking Wall Street turbulence today because investors fear that heavy oil prices will sustain above-target inflation. Today’s 4% crude lift places the WTI benchmark back to nearly $100 per barrel, with the adverse implications, such as concerns about a potentially tighter Fed and loftier cost pressure expectations, clearly present across the yield curve. Indeed, the Treasury complex is climbing in bear-steepening fashion led by duration, as the longest-dated maturity, the 30, soared to a 23-year high this morning, nearly hitting the 5.50% milestone. But it’s not just fuel supply worries, geopolitical concerns, fiscal deficits and amplified military expenditures that’s battering fixed income, it’s also unprecedented amounts of corporate borrowing to fund the AI buildout accompanied by outstanding economic growth that is raising rates. This Thursday’s calendar was emblematic of the buoyant activity, as unemployment claims and new home sales arrived better than projected, characterized by lighter on the former and hotter on the latter. Additionally, constructive discussions so far with Beijing, including a two-month extension of the trade truce paired with Presidents Trump and Xi Jinping agreeing that tech regulation is currently not needed, were positive for GDP and earnings prospects. Still, soaring interest charges and an appreciating greenback are weighing on animal spirits as the four major domestic equity benchmarks sink amidst 8 of the 11 principal sectors declining on the session. Elsewhere, non-energy commodities and cryptocurrencies are suffering losses as well while volatility protection instruments and prediction markets catch bids in light of the risk-off sentiment.

Unemployment Claims Depict Stable Labor Market

Unemployment claims continued to portray light layoff appetites across businesses amidst labor-market stability. Initial and continuing filings were relatively unchanged from the prior print in the past two weeks, with the 197k and 1.719 million reported for the weeks that ended Sept. 19 and Sept. 12, fairly close to the 198k and 1.717 million from the previous release. Still, the figures were below the median estimates of 201k and 1.750 million and the four-week moving averages fell from 203.75k and 1.759 million to 202k and 1.746 million. 

New Home Sales Hit Fastest Pace of 2026

New home sales last month expanded at the fastest pace of 2026, as discounts and concessions helped bridge the gap between builders and buyers. The 684k seasonally adjusted annualized units represented a 6.4% month-over-month (m/m) increase in momentum and easily surpassed both the median estimate of 620k and July’s upwardly revised 643k. Regional performance was mixed despite the headline buoyancy. The Midwest and South experienced jumps of 84.9% and 6.9% m/m  in the pace of transactions while the Northeast and West suffered from 36.1% and 15.2% declines during the period. Inventories sunk modestly from an elevated level while valuations remained near the low end of their recent ranges, with the price spread comparing existing residences and fresh builds remaining historically wide.

Hikes Into a Supply Shock?

Market participants seem to believe that Fed Chair Kevin Warsh is willing to hike interest rates many more times to battle inflationary pressures that are almost entirely being bolstered by energy. The Treasury complex expects four 25-basis point benchmark increases by the end of next summer, for a total of another full percent. But with housing price momentum continuing to recede from a both a purchaser and renter perspective, the modest effects of tariffs largely behind us and wage bills in check, it seems unreasonable for the central bank to tighten a lot more in the near term against a backdrop that is generally featuring cooling, not warming, cost forces. Sure, we’re well above target, however, if its predominately due to a supply shock, then the hasty repricing of monetary policy expectations currently doesn’t make much sense, as a relief in fuel charges will bring us back into the vicinity of the 2% objective.

International Roundup

Retail Sales In Canada Climb After July Contraction

After falling 0.7% m/m in July, retail sales in Canada are estimated to have growth 1.3% last month, according to Statistics Canada. The weakness was marginally less severe than the economist consensus estimate for a 0.8% contraction. In a related matter, Statistics Canada also released its full report for July. Among broad categories, online commerce and furniture, home furnishing, electronics and appliance retails experienced m/m declines of 3.5% and 1.2%. Motor vehicle and parts dealers were also weak with transactions falling 0.8%, largely due to new car sales dipping by 1.3%.

And Manufacturing Picks Up

Manufacturing sales in Canada are expected to have climbed 1.1% last month, according to preliminary data from Statistics Canada. The result would be a reversal from the 0.4% decline in July. The primary metals and chemical subsectors are expected to have experienced the largest sales gains.

Japan’s Economic Activity Growth Slows

Economic activity in Japan continued to grow this month but at a slower pace than in August, according to S&P Global Flash Purchasing Managers’ Indices. The broad manufacturing and services gauge sank from 53.5 in August to 52.5. It was the lowest reading since May but remained substantially above the contraction-expansion threshold of 50. The manufacturing gauge slipped from 54.9 to 54.1, missing the economist consensus estimate for 55.  for both services and manufacturing moving. Within manufacturing, export orders bucked the overall slowing trend. Orders from abroad remained at the eight-and-a-half-year record in August. Services providers, conversely, said orders from abroad were strong while both sectors reported softer domestic demand. A weak yen exchange rate combined with higher energy costs resulting from the Middle East conflict, furthermore, triggered sharp input cost increases. Staffing expenses also increased. With higher materials and staffing costs, firms hiked their output prices. The slowing growth didn’t prevent firms from expanding their payrolls with hiring hitting its fastest pace since February. This month also market a full three years of job expansion. Confidence, meanwhile, hit its strongest level since February with firms anticipating continued demand in areas such as semiconductors, AI, defense and automobiles. At the same time, firms expressed concerns about domestic demand and high prices.

Australia Labor Data is Lukewarm

Payrolls in Australia added 39.5k workers in August, substantially outpacing the economist consensus estimate of 21.5k and reversing from July’s 15.9k contraction, according to the Australian Bureau of Statistics. Despite the strong hiring, the country’s unemployment rate ticked up 0.1 percentage point to 4.6%, a result of an increase in the labor participation rate, or the percentage of the population that is either employed or seeking work. Economists anticipated no change in the unemployment rate. A deeper look at the data provides a mixed view of the country’s labor market at a time when the Reserve Bank of Australia, which meets on Tuesday, is expected to hike its key interest rate from its current 4.35%. level. The recent net hiring resulted from employers snatching up part-time employees with the ranks of full-timers falling by 6,300. Meanwhile, the number of individuals considered to be unemployed climbed by 28.k to 722.9k and the labor participation rate hit 67.1%. Economists anticipated a repeat of July’s 66.9% print. In addition to the mixed labor data, yesterday’s S&P Global Purchasing Managers’ Indices depicted the country’s manufacturing sector slipping into contraction and growth in the services industry slowing.