U.S. crude and long bonds became the pressure points as the Iran war and unresolved China talks fed Friday’s risk-off session. West Texas Intermediate rose above $105, up more than 9% for the week, while Brent moved over $109 and the 30-year Treasury yield climbed above 5.12%, near a one-year high. The 10-year yield also pushed close to 4.56%, and early equity trading showed the S&P 500 down 1%, the Nasdaq Composite off 1.3%, and the Dow lower by 430 points.
Oil shock, rate shock
Bond selling extended beyond the U.S. as investors marked up inflation and financing risk tied to energy. The 10-year Treasury yield ended Friday near 4.6% after rising nearly 24 basis points over the week, a move that matters for mortgages, auto loans, credit cards and other consumer debt because the benchmark rate is set by markets rather than the Fed.
The commodity channel remains tied to Hormuz. Since the Iran war began on Feb. 28, transits through the Strait of Hormuz have effectively ground to a halt, after the waterway had carried more than 20% of the world’s energy supply before the war. Trump said Friday he had not asked Xi Jinping to use China’s leverage over Iran to reopen the strait, and he also said Iran’s latest offer to end the war was “not enough.”
The Beijing leg added little clarity for markets:
- Trump said tariffs did not come up in his meeting with Xi.
- U.S. Trade Representative Jamieson Greer said chip export controls were not discussed.
- Officials described talks about a “board of trade” with China but gave few details.
- The U.S.-China trade truce expires in November, and Greer said, “we’ll see about that,” when asked about an extension.
Equities have already shown they can detach from weak sentiment for stretches. Seven weeks after the Dow and Nasdaq entered correction territory on March 27, stocks had rebounded even as oil stayed high and Hormuz remained closed; by April, annual inflation reached 3.8%, up from 2.4% in February. Friday’s unresolved condition is narrower and more mechanical: oil above $105, 30-year yields above 5.12%, and no reopening of Hormuz.
