Benchmark borrowing costs surged on Sept 15 as the 10-year US Treasury yield reached 5.04%, the highest intraday level since July 2007. The bond selloff was fueled by crude oil prices topping $106 per barrel, a four-month high triggered by a Saudi Arabian pipeline shutdown that halted 7 million barrels of crude per day. This spike in long-term yields pushed the average 30-year fixed mortgage rate to 7.22%, the highest mark since May 2024.

Federal Reserve Chair Kevin Warsh faces a 90% probability of increasing interest rates this week to curb inflation driven by energy shocks. Goldman Sachs and JPMorgan have shifted their forecasts to expect a hike, with Goldman projecting a 25 basis point increase. The potential move would be the first rate hike under Warsh's leadership and threatens the political truce with President Trump, who spent much of last year pushing for lower borrowing costs.