Treasury yields and oil jointly raise the cost of capital

On September 24, the US 10-year Treasury yield reached 5.1497%, its highest since 2007, while the 30-year yield touched 5.4461%, the highest since 2004. Stronger business activity and the fastest rise in input prices in nearly four years led markets to reprice inflation, lifting the implied probability of a rate hike next month from about 53% to 66%. Oil rose roughly 2% as US-Iran talks made little progress. Higher yields increase borrowing costs and valuation discount rates, while oil raises transport and production costs; these are intraday market readings and remain volatile.