US Yields Push Higher Ahead of the Fed

• US Treasury yields pushed higher as oil revived inflation concerns, with the 10-year briefly topping 5.0% before easing to 4.99%. The move keeps pressure on longer-dated funding costs ahead of this week’s Fed decision.
• Brent rose to around US$106/bbl after Saudi Arabia’s East-West pipeline was shut, tightening an already constrained supply backdrop. Markets now price roughly a 90% chance of a 25bp Fed hike this week.
• Diplomacy remains fluid, with the Iran-Oman shipping agreement delayed, while President Trump flagged potential progress on both Iran and a Russia-Ukraine energy truce. Any credible de-escalation would provide immediate relief to oil and rates markets.
• Domestically, consumer spending rose 1.1% in August, but much of the strength came from a 12% jump in fuel spending; ex-fuel growth was a softer 0.6%. RBA Deputy Governor Sarah Hunter reiterated that inflation risks remain “skewed to the upside” in yesterday’s fireside chat.
• Ahead today: Australian consumer confidence is due and Fed commences it’s two-day monetory policy meeting.