West Texas Intermediate settled at $102.48 on Thursday, up 6.7%. Brent gained 5.9% to $107.63, and both marked their highest closes since May 19.
Crude is up 52.9% since the Iran war began in late February and 78.5% year to date. Every other market yesterday was a reaction to that one number.
Bonds absorbed the oil move first. The 10-year Treasury yield rose more than 11 basis points to 4.954%, its highest since October 26, 2023.
The 30-year touched 5.368%, a level last seen in 2007. The 2-year hit 4.56%, the highest since July 2024.
The short end is the one to watch this morning. It is pricing a hike, not just an energy premium.
Equities closed lower for a fourth straight session, the longest losing streak since June. The S&P 500 fell 0.58% to 7,591.70 and the Dow shed 316.56 points to 52,064.10.
The damage sat where rising rates bite hardest. Marvell, Intel and Lam Research each fell about 3% on long-dated credit costs, and the Russell 2000 lost 1.04%.
The VIX closed at 17.84, up 8.4%. That is an orderly slide, which leaves room for a sharper repricing if today's print runs hot.
Gold did not behave like an inflation hedge. It fell roughly 1.7% to near $4,326 as real yields climbed and the dollar firmed.
That is the session's cleanest divergence. Buyers treated a crude shock as a rate story rather than a debasement story.
Silver dropped 1% to $66.62. A cool CPI would put both moves back in play faster than it would rescue equities.
The repricing traces back to yesterday's producer data. August PPI rose 0.4% on the month and 5.4% on the year, a tenth above forecast, with energy costs up 4.2%.
Futures now put the odds of a hike on September 16 at about 71%, up from 61% before that report. The move showed up in the 2-year ahead of showing up anywhere else.
The Fed is in blackout through September 17. Today's inflation reading is the last input policymakers get before they vote.
August CPI arrives at 8:30 a.m. ET. Consensus is 3.4% year over year and 0.4% month over, with core expected at 2.4% annually.
Core carries the meeting, not the headline. A 0.3% core month would argue the energy shock is leaking into services, and the 2-year would lead the response.
Kroger reports before the bell with a call at 8 a.m. ET. The University of Michigan's preliminary September sentiment index follows at 10 a.m., and record August gas prices make it the week's most exposed consumer read.
