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US 10-year yield and 30-year highest since 2007 financial crises

Big, Beautiful Bond Yields — Ferguson Wellman

Yields on the 10- and 30-year United States treasuries rose on Monday amid the latest escalation in the Middle East conflict. The US targeted Iranian launchers, citing an imminent Iranian attack, with Tehran retaliating shortly after. US President Donald Trump stated again that his administration will “hit them hard,” sparking fears of a further deterioration of the hostilities.

The 10-year note yield grew by 3 basis points to 4.752% at 9:08 am ET, the highest level since January 2007. The 30-year bond yield increased by 4 basis points to 5.248%, while the 2-year note yield fell by 1.1 basis points to 4.339%.

NN: A good time to start operations if you have not done so already. See BlackMask Trade Recs titled: Zero Coupon Bond
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US and Iran Exchange Attacks for First Time in About a Month

  • The US and Iran exchanged strikes as American forces hit Iranian rocket launchers and Iran responded by firing missiles toward Jordan.
  • Iran’s Islamic Revolutionary Guard Corps launched a missile-and-drone attack on US air bases in Jordan in retaliation for the American airstrike, but Jordan’s military intercepted the missiles.
  • The US attack was the first military action against Iran since late July, and any sustained return to hostilities risks driving up energy costs and stoking inflation.

The US and Iran exchanged strikes for the first time in about a month as American forces hit Iranian rocket launchers and the Islamic Republic responded by firing missiles toward Jordan. Captain Tim Hawkins, a spokesperson for US Central Command, said Sunday that Iran was preparing to launch rockets carrying mines into the Strait of Hormuz. He added that American “forces are monitoring the area closely and remain prepared to protect the free flow of commerce through this essential waterway.” Iran’s Islamic Revolutionary Guard Corps launched a missile-and-drone attack on US air bases in Jordan early Monday in retaliation for the American airstrike, state-run IRNA reported in a post on X. Jordan’s military intercepted eight missiles after they breached the kingdom’s airspace, destroying them before they caused any damage, the Jordan News Agency reported. The end of weeks of relative calm on the military front sent oil prices higher. Brent crude climbed 2.4% to above $90 a barrel. The US attack was the first military action against Iran since late July, as President Donald Trump has shifted toward an economic pressure campaign aimed at winning concessions from Tehran. Countries with ties to Tehran have so far shrugged off sanctions threats, and analysts have been underwhelmed by early US actions. Last week, the US military said it finished clearing mines from shipping routes in the strait, which previously carried one-fifth of the world’s oil and liquefied natural gas.

US allies, however, have privately warned that the strait was still likely mined.

Foreign Minister Abbas Araghchi said last week that Iran remains open to resuming diplomacy with the US, but argued that progress depends on Washington abandoning its pressure campaign. Following what he described as “creative discussions” with Qatar, a mediator in the conflict, Araghchi said in a social media post that progress “hinges on US understanding of one simple fact: Pressure doesn’t work.” Treasury Secretary Scott Bessent promised an “economic onslaught” against Iran and its trading partners. That includes China, which buys 90% of Iran’s oil. He said the White House would be discussing with allies their plans to stop buying Iranian products, but so far there have been no agreements to do so. Bessent told the Associated Press ahead of the Group  20 finance ministers meeting in North Carolina that the US would impose sanctions this week on a second bank that does business with Iran. Last week, Treasury proposed a rule that would sever the Emirati branches of Banque Misr, Egypt’s second-largest bank, from the US financial system. “This is going to be financial violence if we have to,” Bessent said.

NN:  Sounds pretty desperate to me. Remember the money ball oil is not  flowing. And prices are riseing and supplies are getting tighter by the day.
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Oil rises 2% amid renewed US-Iran tensions….. US strikes Iranian launchers on Larak Island

 

Prices of crude oil rose around 2% as renewed tensions between the United States and Iran fueled concerns over supplies through the Strait of Hormuz. The move followed US strikes on Iranian missile launchers on Larak Island and subsequent Iranian attacks targeting US forces in Jordan. At 11:33 pm ET, West Texas Intermediate (WTI) for October settlement rose 1.85% to $84.99 per barrel, while Brent for November delivery gained 2.11% to $90.15 per barrel at 11:46 pm ET.

US strikes Iranian launchers on Larak Island

United States forces struck two Iranian launchers on Larak Island on Sunday, Axios’ Global Affairs Correspondent Barak Ravid reported, citing a US official. “Earlier today, U.S. forces struck two Iranian launchers on Larak Island. Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into the Strait of Hormuz,” Ravid quoted ⁠the official as ⁠saying. Separately, the IRGC-affiliated Fars News Agency reported that an explosion was heard near Larak Island, but said its cause was unknown. The reported strike comes amid continued tensions over the Strait of Hormuz, which Tehran maintains remains closed to vessels without its permission.

NN: I guess we could say the memorandum of peace is dead:

 

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Hormuz blockage is taking away 45 Million Bpd of Supply

  • Nearly half of global oil supply is produced in conflict-affected countries, with the Middle East disruption alone removing an estimated 5–7 million bpd from the market.
  • The bigger vulnerability is increasingly refined fuels, as Middle Eastern disruptions and Ukrainian attacks on Russian refineries have tightened diesel and gasoline supplies while global refining capacity has fallen sharply.
  • The crisis is increasing dependence on U.S., Canadian and Venezuelan supply, but Canadian oil-sands maintenance and limited Venezuelan production growth could further tighten the market and intensify inflationary pressures.

Almost half of the world’s oil supply is produced in regions currently engaged in hot conflicts, Reuters reported this week. The situation raises questions about long-term oil supply security and the limits to diversification. The Middle East, of course, is the most obvious and most disruptive example. While oil prices on speculative markets have remained capped by trader optimism, the physical supply of the vital energy commodity has been severely compromised, leading to rationing and emergency releases from storage across the world. Meanwhile, Ukraine is pursuing a campaign of bombing Russian refineries with drones in a bid to persuade Moscow to make concessions regarding their conflict. So far, this has not happened, but the drone attacks have resulted in fuel shortages that have sent a ripple effect beyond the Russian borders because the country was the world’s second-largest fuel exporter after the United States. The Gulf states, by the way, were also, together, large exporters of refined fuels, which is why many analysts are now warning that the crisis in fuels is the one that needs to be addressed, not the situation in crude oil. Addressing it, however, would be quite difficult because the world’s refining capacity has shrunk considerably over the past decade or so, specifically in Europe, which is now struggling with the consequences of those developments, with diesel prices 70% higher than they were in February due to the continent’s dependence on imported fuels.. Over the past couple of months, the Middle Eastern conflict has also expanded, as it tends to happen in the region, with another major oil chokepoint under threat from attacks by the Yemeni Houthis. Indeed, attacks have already taken place, forcing shippers to re-route to alternative channels, such as the Suez Canal. This means longer journeys for tankers, which adds costs to the final price of the cargo, on top of the war premium already crushing demand in poorer countries. The latest reports from the Middle East once again pushed oil prices lower, saying that Iran and Oman were discussing joint management of the Strait of Hormuz. The discussions were perceived as a sign the waterway could be reopened soon, despite Iran’s threat to not let a drop of oil out of the Persian Gulf if the U.S. went forward with its latest idea of pressuring Iran economically, with more sanctions. Developments in Russia and Ukraine are no more optimistic. Ukrainian forces continue striking refineries on a daily basis, and while repairs have already brought back several facilities online, repairs take time, during which time fuel supply is constrained—and the ban on gasoline and diesel exports is still very much in place. All these events have increased the world’s reliance on U.S. crude and refined fuels, with the latter dependent on heavy crude supply from Canada and Venezuela. Now, this heavy crude supply may move lower. In September, Canadian crude oil production may drop by 300,000 barrels daily due to maintenance activities in the oil sands, Rystad Energy said this week. Usually, whenever such a seasonal disruption occurs, it gets offset with crude from storage. Unfortunately, crude in storage is also lower than usual—the lowest in 12 months, per the report. And maintenance cannot be skipped. Meanwhile, Venezuela’s oil exports are falling—moderately but enough to cause concern in those of a wary nature due to the reason for the fall. The July daily average stood at 1.16 million barrels, down from 1.2 million barrels in June. The reason, as reported by Reuters, was lower withdrawals from storage. This means that Venezuela was not exporting more crude because it was producing more but because it was withdrawing it from inventories. As these decline, so would exports until PDVSA and its new/old partners from the United States and Europe manage to speed up the production expansion.

According to Reuters, the countries involved in all these conflicts—and that includes Venezuela—last year produced 43% of the world’s oil, or 45 million barrels daily.

Now, supply from the Middle East is down by between 5 and 7 million barrels daily, according to various analyst estimates, and global refining capacity is down by 10% because of the wars in the Middle East and Ukraine.

NN:  Houston we got a problem! You think?

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Oil Drops as Iran Diplomacy Gains

Oil extended declines as fresh diplomatic efforts helped renew optimism the Iran war would not escalate, while a US plan to ramp up economic pressure on Tehran spared the country’s trading partners from harsher measures for now.
Brent dropped nearly 4% to settle below $89 a barrel, the lowest level in over a week. West Texas Intermediate settled just over $82 after a spate of headlines helped ease traders’ concerns about a return to active fighting could further snarl shipping through the Strait of Hormuz.
Pakistan’s Army Chief concluded a one-day visit to Iran, with Iranian media saying the trip yielded valuable results. Iran and Oman, meanwhile, “discussed the importance of resuming navigation through the Strait of Hormuz,” according to a joint statement. Investors have largely shrugged off US plans announced Monday to ratchet up economic pressure on Iran as President Donald Trump seeks to wind down the war. Washington stopped short of imposing secondary sanctions on nations dealing with Tehran, including China, the top buyer of Iranian crude. Countries will face a specific timeline to shut down links with Iran or face unilateral punishment, US Treasury Secretary Scott Bessent said. While the Treasury added new restrictions on around 60 entities, including Tehran’s oil-revenue generation networks and shadow fleet vessels moving its petroleum products, Bessent’s latest measures fell short of expectations. “There was a lot of buildup around the announcement but what we got was more a warning about where policy is heading than an immediate shock to physical supply,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP. “Until secondary sanctions start changing who can buy, ship or even finance Iranian crude, I don’t think traders have much reason to add another geopolitical premium.”
Prices dipped further on Tuesday after the New York Times reported the US would be returning diplomats to Middle East embassies, suggesting Washington did not anticipate ramping up military action.

Crude is still up around 45% this year as the war – now in its sixth month – continues to disrupt the shipping of oil and refined fuels out of the Middle East. The impact has been particularly acute in fuel markets, which have also faced a hit from Ukrainian attacks on Russian refiners, pushing premiums to crude to stratospheric levels.

Russia is discussing extending its ban on diesel exports for another month as Ukraine continues to strike the nation’s refineries at a record pace, according to a person with knowledge of the matter. “Positioning has moved from heavily short to more long, leaving the market vulnerable to profit-taking, while sanctions came in softer than feared and the diplomatic track appears to be gaining momentum,” said Oil extended declines as fresh diplomatic efforts helped renew optimism the Iran war would not escalate, while a US plan to ramp up economic pressure on Tehran spared the country’s trading partners from harsher measures for now. Brent dropped nearly 4% to settle below $89 a barrel, the lowest level in over a week. West Texas Intermediate settled just over $82 after a spate of headlines helped ease traders’ concerns about a return to active fighting could further snarl shipping through the Strait of Hormuz. Pakistan’s Army Chief concluded a one-day visit to Iran, with Iranian media saying the trip yielded valuable results. Iran and Oman, meanwhile, “discussed the importance of resuming navigation through the Strait of Hormuz,” according to a joint statement. Investors have largely shrugged off US plans announced Monday to ratchet up economic pressure on Iran as President Donald Trump seeks to wind down the war. Washington stopped short of imposing secondary sanctions on nations dealing with Tehran, including China, the top buyer of Iranian crude. Countries will face a specific timeline to shut down links with Iran or face unilateral punishment, US Treasury Secretary Scott Bessent said. While the Treasury added new restrictions on around 60 entities, including Tehran’s oil-revenue generation networks and shadow fleet vessels moving its petroleum products, Bessent’s latest measures fell short of expectations. “There was a lot of buildup around the announcement but what we got was more a warning about where policy is heading than an immediate shock to physical supply,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP. “Until secondary sanctions start changing who can buy, ship or even finance Iranian crude, I don’t think traders have much reason to add another geopolitical premium.” Prices dipped further on Tuesday after the New York Times reported the US would be returning diplomats to Middle East embassies, suggesting Washington did not anticipate ramping up military action. Crude is still up around 45% this year as the war – now in its sixth month – continues to disrupt the shipping of oil and refined fuels out of the Middle East. The impact has been particularly acute in fuel markets, which have also faced a hit from Ukrainian attacks on Russian refiners, pushing premiums to crude to stratospheric levels. Russia is discussing extending its ban on diesel exports for another month as Ukraine continues to strike the nation’s refineries at a record pace, according to a person with knowledge of the matter. At the same time, large volumes of crude supplies continue to transit Hormuz with their satellite signals turned off. Those volumes are in millions of barrels a day and have helped generally keep a lid on prices that had been expected to soar at the outset of the conflict. “Positioning has moved from heavily short to more long, leaving the market vulnerable to profit-taking, while sanctions came in softer than feared and the diplomatic track appears to be gaining momentum,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “For now, more diplomacy, fewer signs of military escalation and improving flows are taking some of the geopolitical premium out of crude.” Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “For now, more diplomacy, fewer signs of military escalation and improving flows are taking some of the geopolitical premium out of crude.”

NN: Forty years of diplomacy  and what do we have to show for it. Do you really buy into this snake oil?
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Oil drops on latest US-Iran ceasefire hopes… oil still not flowing out of the straights

Crude oil prices continued to slide, dropping more than 5% in post-settlement trading, following a report that the United States and Iran could announce a ceasefire extension soon. According to the report, the parties agreed on the free navigation through the Strait of Hormuz and the resumption of negotiations and technical-level meetings. West Texas Intermediate (WTI) for deliveries in October dipped 5.45% to sell for $80.30 per barrel at 4:21 pm ET. At the same time, Brent for the same month’s settlements plunged 6.23%, going for $86.27 per barrel.

NN: This is a rerun of a bad movie. Here we go…. again!
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QUANTIUM BOND BUYING Trying to save economy

U.S. TREASURY DEBT FINANCING CRISES:

Foreign Liquidation of US government Debt: Especially China dumping its vast holding of US government debt

U.S. Government Redemptions: To pay soaring social security costs as baby boomer retire in mass.

Treasury Buybacks, and Upward Pressure on the Long End of the Yield Curve: Financing costs of the national debt are soaring. In 2022 interest Payments on the national debt was 717.6 billion at a interest rate of 1.5%. Now for 2026 interest payments on the national debt are projected to be 1.28 trillion a 78% increase. The reasons I say projected that’s at the present interest rate of 3.45% Whats got the Treasury shitting all over their pint stripe suite is the rate is rising and if they don’t intervene it could be over 5%. Right now just the interest payment on the national debt is the largest budjet item and climbing

As a footnote

Janet IDIOT Yellon could have financed the nationl debt decades in the future using Treasury Bonds at 1.25%, Mss Stupid Ass chose to do the bulk of financing in the short term T Bill market

Prepared: August 25, 2026

Continue reading “QUANTIUM BOND BUYING Trying to save economy”

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US vows ‘economic D-Day’ as Iran threatens to halt all oil exports

The U.S. threatened Iran with what it called “the greatest ​financial offensive ever marshalled” as it prepared to roll out economic sanctions on Monday that target Iran’s trade partners. Iran in turn vowed ‌to shut down all oil exports from the Gulf “if the economic war continues.” U.S. Treasury Secretary Scott Bessent will hold a press conference at 1 p.m. EDT (1700 GMT) on Monday amid promises to reveal even more severe measures on a country that has endured near-continuous economic sanctions since the Islamic Revolution of 1979. “At dawn begins an economic D-Day — the single greatest financial offensive ​ever marshalled against an adversary,” Bessent wrote in an opinion piece published in the Financial Times on Sunday. The warring nations have not conducted military ​strikes against each other for weeks, but they also have not engaged in meaningful talks to end the six-month-old conflict. Thousands ⁠of people have died, most of them in Iran and Lebanon, since the U.S. and Israel began strikes on February 28, degrading much of Iran’s conventional ​military capacity and inflicting economic pain while killing Iranian Supreme Leader Ayatollah Ali Khamenei.
But Iran has preserved enough missile and drone capability to attack its Gulf neighbours and threaten oil ​tankers in the Strait of Hormuz, bringing shipping in the key waterway to a near standstill and pressuring world fuel prices. The exact state of Iran’s nuclear program, which the Americans and Israelis aim to wipe out, remains unknown.
Without detailing specific measures, Bessent signalled the U.S. would target “fearful nations” that practice “appeasement” by engaging with Iran’s economy and financial system. “They would do well ​to consider the consequences of sustaining it,” he wrote in the Financial Times. Iran has been bracing for the sanctions for days, issuing a series of strongly ​worded statements hinting at a major military response. Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, on Sunday suggested economic retaliation. “If the economic war continues, not a single drop of ‌oil will ⁠be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf,” Rezaei wrote in a social media post. “Iran will regard any country’s participation in or support for America’s economic war against the Iranian people as an act of war.”  Bessent previously urged China to cooperate with the U.S., noting China historically has received half of its oil imports from the Gulf region. A spokesperson for China’s embassy in Washington responded with a statement that “sanctions and pressure do not help resolve ​the problem,” while calling for diplomacy. Iran’s economy ​was already under pressure from international ⁠sanctions before the U.S. and Israeli attacks destroyed parts of its infrastructure.Though Tehran remains outwardly defiant, Iranian officials have warned that further economic punishment could increase hardships, reignite unrest and further erode the Islamic Republic’s legitimacy. Iran entered the war with high ​inflation, a weakening currency, energy shortages, sanctions and deep structural weaknesses, and must now contend with damaged infrastructure, disrupted ​trade, lost production and ⁠the cost of rebuilding.
In the absence of official face-to-face talks between the U.S. and Iran, which were last conducted in June in Switzerland, other nations including Qatar, Pakistan and Turkey have attempted to promote diplomacy. Iran said Pakistan’s army chief, Asim Munir, will visit Tehran on Monday as part of efforts to restore peace and security in the ⁠region, but ​gave few details. Pakistan has been mediating in the conflict and a Pakistani government source said Munir ​would touch on recent developments including the U.S. threat of new sanctions. U.S.-Israeli strikes on Iran and Israeli attacks on Lebanon during the war have killed thousands  and
displaced millions. The U.S. reported 18 military personnel ​killed and more than 750 wounded.
NN:  Sanctions don’t mean shit to Iran.  The countries that surround Iran all have massive smuggling based black markets. And they ALL hate America. Iran holds all the aces. They can close the straights with a pop gun. And they know America does not have the balls to invade with boots on the ground. So the press conference at 1 p.m. EDT (1700 GMT) is nothing more than a comedies show!

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Bessent Has No Easy Fix for What’s Really Driving Yields Up

Treasury Secretary Scott Bessent came to office blasting his predecessor for trying to re-engineer the world’s largest bond market. Last week he took a stab at it himself.

By buying back a swath of long-term US debt, which will require selling more short-dated securities, Bessent said Thursday he’ll be doing “what I would call a Treasury twist.” It was a nod to the Federal Reserve’s famous 1960s plan to rejigger Treasury yields. Right now, Bessent said, those yields are out of whack with “equilibrium” levels. (NB: reality is they have to get long rates down to save the system. The largest budget item is paying the interest on the 40 trillion national debt. They are desperate to get rates to 1% or 2% in these good times. As the debt et all time bomb explodes they will  have to go to double digit interest rates.. Upcoming reports i am prepairing will explain)

Out of Whack? Ten-Year Yields Have Climbed Across the Globe

Elevated borrowing and inflation rates have sent yields to highest in years

Source: Bloomberg

All of this suggests that the Treasury chief’s drive to get borrowing costs down, especially with November’s midterm election looming, is running into forces beyond his control that are pushing them up. That includes record debt levels not just in the US, where one gauge surpassed $40 trillion this week, but across developed nations. There’s a surge in corporate issuance too, led by the artificial intelligence boom. Inflation has jumped since President Donald Trump upended energy markets by starting a war with Iran, and confusion over Fed Chairman Kevin Warsh’s strategy is adding to investor concerns. Bessent’s vision of yield-curve control, or influencing rates across different maturities, extends beyond Treasuries. It includes the so-called hyperscalers, companies pouring money into AI and borrowing to do it. Earlier this month, Alphabet Inc. sold bonds ranging up to 40 years. The apparent attempts to shape yields even prompted debate over whether there’s now a “Bessent put,” an echo of the old belief that former Fed Chair Alan Greenspan would always bail out the stock market. Chris Turner, global head of markets at ING Groep NV, was among those using the term this week, though many doubt that Bessent has the firepower to pull off anything similar for bond yields. In coming days, Bessent said he and White House budget chief Russ Vought “will be examining both on the revenue side and the cost side what we can do.” He suggested a crackdown on fraud, and reductions in transfers to states. Besides the Treasury’s interest bill — now running well in excess of $1 trillion a year — Social Security, Medicare and Medicaid spending are the main drivers of a fiscal deficit forecast at around 6% of GDP this year. Overhauling those entitlement programs is “a non-starter in the near term,” and even more so after November if Democrats win at least one chamber of Congress, Bianchi wrote. Warsh wants to revamp the central bank’s balance sheet, which currently features some $4.54 trillion of Treasuries. He’s also spoken of a new “Fed-Treasury accord,” without spelling out what that would involve.