UltraWealthMindset

DAILY MARKET INTELLIGENCE, DECODED — THINK LIKE THE PEOPLE WHO MOVE CAPITAL

Archive

From the archive · Friday, September 25, 2026

Thirty-year yields hit their highest since 2004 as the curve steepened from the far end — and the diesel test we set two days ago fired.

Long-term borrowing costs hit a twenty-year high; oil looks secondary.

Supply-led repricing of the long end

The Treasury selloff changed shape on 2026-09-24. The thirty-year yield rose 6 basis points to 5.46%, the highest since 2004; the ten-year rose 4 to 5.16% and the five-year 3 to 5.03%. On Wednesday the five-year led. On Thursday the far end did, and not only in Washington — Japan's ten-year reached its highest in decades on the same day. Brent's November contract rose 3.41% to $106.60 as Iran warned the war could spread to the Indian Ocean. Equities were flat.

The obvious reading is that oil pushed inflation fears into the long end. The evidence on the day does not support that on its own. Gold fell 0.47% and silver 1.48%, and New York Harbor diesel — the refined product that reaches freight, food and the price index — fell 0.97% for a second session while crude rallied. Had the long end been selling on an inflation scare, those three would have moved the other way. What the day did carry was supply. Wednesday's five-year sale cleared 5.033%, above that day's settle and 64 basis points above August. Japan is struggling to fund the Takaichi budget without new deficit bonds. France is in another budget fight that could bring down a government . And the world's debt stock is at a record.

The private sector has joined the same queue. SoftBank sold $11.1 billion of bonds to fund its OpenAI stake ; Anthropic committed $11.6 billion over seven years to Akamai; and Goldman's Lindsay Rosner describes new technology issuance repricing the debt already outstanding. US mortgage rates passed 7%. A long end that has to absorb sovereign refinancing, deficit funding and an AI build-out financed with debt is being priced on quantity, and quantity does not fall on a soft data print.

We owe two marks. On 23 September we wrote that the product-squeeze view was wrong if the diesel margin over Brent fell below $95 a barrel within two weeks without a ban. It closed near $92 on 24 September, with the Energy Secretary now talking about restrictions rather than a ban. The test fired; the view is marked wrong. On 24 September we attributed Wednesday's selloff to growth and said we were wrong if the curve steepened from the long end, because that would put supply in charge. It steepened the next session, the 5s30s spread widening to 43 basis points from 40. Wednesday's attribution stands for Wednesday; Thursday belongs to supply. The seven-year sale's result is not yet in our record, so the auction half of that test is still open. One older call did mature: on 21 September we said a composite PMI above 55 meant the front end had further to reprice. It printed 58.4 against 55.2, and the five-year stop has since moved 64 basis points.

Elsewhere the policy map held still. The Swiss National Bank kept its rate at zero; Banxico held at 6.5% and said it need not copy the Fed, and the peso fell to 17.71. The US and China extended their trade truce by two months as Xi Jinping's visit began. German business sentiment rose to a three-year high.

**What would prove this wrong.** A phased Hormuz deal — Bloomberg reports negotiators exploring one — that takes Brent back under $100 while the thirty-year falls further than the five-year would say crude was the driver after all. So would 10-year and 30-year auctions on 7 and 8 October that clear at or below the market with the 5s30s spread back under 40 basis points. Conviction is medium on the supply attribution and medium-high that energy is no longer setting the level.

**Method.** Tape figures are the settled session of 2026-09-24; the US cash session of 2026-09-25 had not settled when this was written and is not quoted. Brent, WTI, copper, natural gas and diesel are quoted at exchange settlement on the named contract. The diesel margin converts the New York Harbor contract at 42 gallons a barrel and subtracts Brent; it is an indicator of refining tightness, not a realised margin. Auction figures are stop-out yields from our economic calendar, which carries no tail or bid-to-cover. On-chain balances are settled-dated and quoted in dollars.

Risk radar

What the desk is hedging.

high impactmedium prob.

Japanese yields high enough to bring Japanese money home

Japan's ten-year reached its highest in decades on 2026-09-24, Tokyo is struggling to fund its budget without new deficit bonds, and the yen weakened to 158.78. The scenario is repatriation: domestic yields high enough that Japanese institutions, among the largest foreign holders of Treasuries, stop adding abroad. That would remove a buyer from the long end at the moment supply is rising. Carried 20 September at medium probability and medium impact; impact raised on the breakout.

high impactmedium prob.

AI debt issuance reprices the credit already outstanding

SoftBank's $11.1 billion bond is part of a record high-yield programme, and Goldman's fixed-income desk reports new technology issuance repricing existing debt. The scenario is a supply overhang in AI-linked credit: each new deal clears wider, marking down the bonds already held, and the cost of the build-out rises before any change in demand for it. Carried 24 September at medium probability and high impact, stable; trend now rising on the volume.

severe impactmedium prob.

Iran widens the war to the Indian Ocean

Iran warned the war could spread to the Indian Ocean and Brent rallied, while US and Iranian negotiators are reported to be exploring a phased deal to reopen Hormuz. The engine's tanker-departure series read Hormuz at 295 against a thirty-day mean of 300.3. The scenario is escalation beyond the Gulf, into lanes that have no bypass pipeline. Carried 24 September at medium probability, severe impact and rising; trend now stable as talks run alongside the threat.

high impactmedium prob.

The White House leans on the Fed as long yields climb

Kevin Hassett criticised Fed officials who argued for further increases. The scenario is that political pressure on the Fed rises with long yields, and the market charges for it in term premium rather than in the policy rate — the one outcome that would lift the long end further whatever the data does. Carried 10 August at medium probability and severe impact; impact lowered to high because the pressure is verbal, trend rising.

medium impactmedium prob.

Emerging currencies pay for central banks that stand still

Banxico held at 6.5% and said it did not have to react to the Fed; the peso fell to 17.71, and Moody's told Mexico it needs a fiscal adjustment. India's central bank meets on 7 October with consensus at 5.5% against 5.25%. The scenario is that holding still costs the currency. Carried 18 September at medium probability and high impact; impact lowered to medium because the central banks chose not to cut into the Fed.

On watch this week

  • The 5s30s Treasury spread, now 43 basis points: a move back under 40 would hand the week back to the policy path.
  • The diesel margin over Brent, now near $92 a barrel, below the $95 line this desk set this week.
  • Japanese long-term yields and the funding plan for the Takaichi budget, which Tokyo is struggling to finance without new deficit bonds.
  • Durable goods orders for August, due today — the first hard number since this week's strong surveys.

This is the full read, every morning before the open. Get it in your inbox.