What happened
The 10-year U.S. Treasury yield briefly surpassed 5% on Monday, reaching its highest level since 2023. This increase was driven by rising oil prices and record-high diesel fuel costs. The price of oil surged, with Brent crude reaching over $109 a barrel and U.S. crude oil nearly hitting $105. The nationwide average cost of diesel fuel reached an all-time high, with the national average price rising to $6.23 per gallon.
The increase in fuel prices is attributed to the shutdown of a critical pipeline in Saudi Arabia and delayed talks between Iran and Gulf countries about the future of the Strait of Hormuz. The pipeline shutdown and reduced vessel traffic in the Strait of Hormuz have led to higher oil prices, which in turn are driving up yields. The Federal Reserve is expected to hike interest rates on Wednesday, with market odds of a hike exceeding 90%.
The rising cost of diesel fuel is a significant concern, as it is used in various industries, including trucking, boat transportation, and trains. Economists warn that the high cost of diesel will lead to increased costs for goods and services, contributing to inflation. The national average price of unleaded regular gas also rose to $4.31 per gallon, with prices increasing by over 45% since the start of the U.S.-Israel conflict with Iran.
