The yield on the 10-year US Treasury note is back above 5 percent, a level it had not reached since late 2023 and had touched only once before that since 2007. The benchmark yield has risen about 80 basis points since January, when it traded near 4.15 percent, and the 30-year bond is near 5.3 percent. Two forces are driving the move: oil near $100 a barrel because of the Iran war and the Hormuz blockade, and a Federal Reserve that raised rates this month for the first time since 2023. The government paid about $1.27 trillion in interest this fiscal year.
The months-long crisis in the Strait of Hormuz is still pushing up the cost of moving goods. Brent crude has traded close to $100 a barrel for weeks, and bunker fuel surcharges are feeding into container and bulk cargo rates. Container schedule reliability fell to 56.1%, the sharpest monthly drop since the pandemic, as ships take longer routes and bunch up at ports. Shipping stocks have reached decade highs as investors bet on higher rates. Analysts warn that peak-season demand plus fuel costs could keep rates firm into the fourth quarter. Tanker operators have booked strong earnings, while importers brace for another quarter of unpredictable delivery windows and higher landed costs.
Drewry's World Container Index rose 1% in the week to 24 September to $4,339 per 40ft container, pushed up by the Pacific trades. Shanghai to New York jumped 10% to $8,706 and Shanghai to Los Angeles gained 6% to $6,244, while Asia to Europe slid, with Shanghai to Genoa down 8% to $5,080. Carriers cancelled ten sailings in each of the past two weeks and plan seven more, a sign that rate support is coming from capacity discipline rather than a surge in cargo. For shippers closing out peak season, space is the bigger worry.
The OECD has flagged surging government bond yields as a major concern, warning that higher borrowing costs are tightening public budgets just as growth slows and inflation picks up again. The Paris-based group expects the global economy to grow 2.9% in 2026 and 3% in 2027. Annualised growth cooled from 3.6% in the second half of last year to 2.6% in the first half of 2026. G20 inflation is forecast to average 4.1% this year before easing to 3.6% next year. Secretary-General Mathias Cormann said the buffers that absorbed the Middle East energy shock are being used up. The OECD also expects the US and European central banks to raise interest rates again.
The Federal Reserve raised its benchmark interest rate by a quarter point on September 16, lifting the target range to 3.75% to 4% in a unanimous 12-0 vote. It was the first increase in more than three years and the first policy move under Chair Kevin Warsh, and the September dot plot signals one more hike this year. Energy is the main driver: Brent settled at $107.63 a barrel on September 10, West Texas Intermediate settled at $102.48, and diesel hit a record $5.94 a gallon. Higher fuel costs flow into trucking, rail, air cargo and warehouse operations, and logistics firms report that customers are already asking to renegotiate annual contracts.
Stellantis India has taken full ownership of its manufacturing operations at Thiruvallur in Tamil Nadu after buying the remaining stake held by Hindustan Motor Finance Corporation, part of the CK Birla Group. The plant has built vehicles for the group since 2017. Stellantis plans to raise annual output from about 18,000 units in 2026 to more than 50,000 by 2027, a rise of more than 160 per cent, while more than doubling its direct workforce. Export demand and India's role as a low-cost base for Africa, the Middle East and Southeast Asia are driving the plan. Component suppliers with approvals for the site are expected to add machines and staff ahead of the ramp.
State-owned China Rare Earth Group is in talks to acquire Shenghe Resources, two sources told Reuters, in a deal that would tighten Beijing's control over rare earth mining, separation and magnet supply chains. Shenghe holds a stake in MP Materials, one of the few Western producers of rare earth concentrates, so the transaction would give China's state group a foothold inside a United States supplier. Rare earth magnets are used in electric vehicle motors, wind turbines, pumps, robotics and defense systems. Separately, research from property agency JLL showed cross-border investment in commercial real estate rose 56 percent to 71.8 billion dollars in the first half of the year, led by deals in Asia and Europe.
The Federal Reserve raised its benchmark interest rate by a quarter point this week, the first increase in more than three years, with all 12 members of the Federal Open Market Committee voting for it. The move lifts the overnight funds rate to 3.75% to 4%. Chair Kevin Warsh said inflation is too high and has been for too long, but warned the decision will not immediately lower prices. Brent crude has traded above $100 a barrel during September, and benchmark Treasury yields hit a 19-year peak. Policymakers see headline inflation at 3.7% this year and do not expect to reach their 2% target until 2029.
Global exports of refined fuels such as diesel and gasoline were about 25% lower in late July and August than a year earlier, according to Deloitte's weekly global economic update, which estimates that roughly 75% of the decline came from the Middle East or Russia. Iranian strikes destroyed refining capacity in the Middle East, Ukrainian drones have hit Russian plants, and product tankers cannot pass the Strait of Hormuz while the conflict continues. Saudi Arabia is repairing an attacked pipeline, a job expected to take weeks. West Texas Intermediate traded near $107 a barrel, the 30-year Treasury yield reached 5.17% and the S&P 500 slipped 0.3%.
IMTS 2026, the largest manufacturing technology show in the Western Hemisphere, opened Monday at McCormick Place in Chicago with 1,788 exhibiting companies, including 400 first-time exhibitors. The show covers 1.17 million square feet and runs through September 19, with attendance on pace to top 90,000 visitors from all 50 U.S. states and 113 countries. Organizers estimate a $250 million economic impact for Chicago and Illinois. Exhibitors are focused on robotic machining, cobots and AI-driven production, betting that automation will close a gap: surveys show fewer than 40 percent of U.S. job shops use any automation at all.