US 10-year Treasury yield hits 5.26% as Brent pushes toward $100

US 10-year Treasury yield hits 5.26% as Brent pushes toward $100

The yield on the 10-year US Treasury bond has broken through the 5.25% threshold, hitting 5.26% in a single session, while Brent crude has spent several days flirting with three digits. These are two different fevers that infect each other: that of Treasury paper, which finds no buyer without a premium, and that of oil, which threatens to settle above $100 and reignite the inflation central banks thought they had tamed. The German benchmark, the bund, is also rising. So is the British one. And the French bond has become, de facto, the epicenter of a silent rescue.

The debate over whether this is the great crash or just a scare has been shifting from the headline to the details. At first the talk was about oil; now it is about debt, about Treasury buybacks that no longer move the needle, and about a stock market that is starting to turn red at the same time as the bond rises. When yields and equities fall together, the diagnosis changes.

Why is the US bond rising if the Treasury is buying back debt?

A month ago, the Treasury approved an increase in the volume of its bond buyback operations. On paper, that should ease pressure on the price and contain the yield. In practice, the US10Y has kept climbing ever since. The most widespread reading is that the tool is working less and less: the market is pricing in more debt, more spending and a risk premium that can no longer be bought off with financial engineering. The move is repeating itself in Europe: the British and German bonds are also rising, and the French one has landed in the crosshairs of a de facto rescue that no one has dared to call by that name.

Some argue that oil is not the cause of the crisis, but a catalyst that can be cut short. With the barrel at half its price, the fire would go out and governments could keep kicking the can down the road. The problem, in that scenario, is that Brent is not falling.

Brent and $100: the battle fought every morning

Crude has spent several days topping the low $90s and attacking $100, only to retreat shortly after. That intraday fight is what determines whether the crisis erupts or remains a threat. If the barrel settles definitively above three digits, the energy cost spreads through the whole chain: transport, food, industrial production. And with it comes the inflation central banks believed was under control.

The historical comparison circulating in the analysis is uncomfortable: for years the barrel traded above current levels and society functioned. The difference is debt. Public debt, not oil, is what sets the limit. And that debt is no longer financed at the old price.

The stock market turns red too: the AI bubble deflates

The Nasdaq has lost 26,000 points and the S&P 500 has fallen sharply. The prevailing narrative is the bursting of the artificial intelligence bubble: investors selling to avoid getting hurt, and others selling to build liquidity ahead of the sector's next big IPO. Between the two, the index is bleeding out.

The Thursday pattern has become a ritual: debt buyback, momentary relief in the yield, and back on the attack the next day. Some claim the Fed and investment banks intervene in the bond market to keep the 10-year below 5% before the midterm elections. The problem is that oil news is negative: higher costs for companies, higher prices for citizens and less revenue for the government. With that cocktail, bonds should not improve.

Stagflation: the word everyone avoids but trading desks whisper

The emerging consensus is not a classic recession. It is stagflation with a capital S: inflation above 5% with wages, consumption and economic activity in the gutter. It was not 2008, because back then prices fell. The sequence being discussed is different: first the price of oil erupts, then bonds spike and stock markets plunge, and finally come mass business closures and unemployment.

The strong-recession scenario is set for 2027, with sticky inflation that would leave no growth for years. The AI bust, together with rate hikes, would drag down the GDP of the United States and the West. The figure cited as a reference is Mullaney's, from Boston Partners: the stock market can cope with a US bond at 5%; at 5.5% there is trouble; at 6%, a real mess.

Hormuz, Iran and the oil price: the geopolitical risk nobody is pricing in

The Strait of Hormuz is back at the center. A fire on a commercial vessel that had allegedly abusa Iranian regulations in the strait has set off the alarms. The reading from analysts is that Iran holds veto power over the passage of crude, and that a war with the Persian country has pushed up the prices of oil, diesel and gasoline. The quadrilateral meeting between Iran, Pakistan, Turkey and Saudi Arabia held in Tehran points to a regional security architecture without US involvement, adding a layer of uncertainty to supply.

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The US bond has once again overtaken the French one, but both are falling. Brent, according to the most suspicious analysis, is manipulated. The stock market is rising. And the 10-year yield moves to the rhythm of the Thursday buybacks. The question left hanging is not whether the crash arrives, but how long the system can hold out before oil and debt join hands.