There are national and international forces pressuring yields. 
Change Since Start of War
- 3-Month: +0.22 Percentage Points to 3.89 Percent
- 2-Year: +0.96 Percentage Points to 4.34 Percent
- 10-Year: +0.80 Percentage Points to 4.77 Percent
- 30-Year: +0.61 Percentage Points to 5.25 Percent
Seven Forces Pressuring Yields
- The war in Iran: Oil, diesel, fertilizer and everything that passes through the strait is impacted
- US Budget Deficit: The deficit is growing and the administration wants more spending for the military, farm bailouts, and other priorities some related to the war in Iran.
- Debt: National debt passed the $40 trillion mark. Debt owned by the public is about $32 trillion. Interest on the debt projected to hit $1 trillion in Fiscal year 2026.
- Tariffs: Tariffs increase prices and slow growth. Trump’s trade war with Canada has heated up with negative consequeces.
- International: The US intervened in the Yen because Japan was about to dump US treasuries to buy the Yen. Curiously, Bessent wants Japan to hike rates and reduce debt (actions the US ought to be doing).
- AI-related Credit: A credit boom is fueling AI. Money supply is soaring.
- Treasury and Fed at Odds: The Fed and Treasury are fighting each other. Warsh wants a clean market signal and he wants to eliminate QE. However, Bessent is discussing unlimited Treasury actions to force down long-term yields. This impacts investor confidence.
Five Forces Impacting Diesel
- Harvesting Peak: August to November especially corn and soybeans
- Christmas Shipping: Peak annual trucking
- War in Iran: Reduced crude supplies
- War in Ukraine: Ukraine is bombing Russian refineries. Russia, normally a large diesel exporter, stopped diesel exports.
- Record Low Inventories: The Strategic Petroleum Reserve is at a record low.
AAA Fuel Prices
AAA fuel prices as of 11:00 PM September 7, 2026.
Twitter is littered with people wanting the Fed to stay on hold.
The unmistakable message from the bond market is the Fed is behind the curve and needs to hike.
The Fed should hike, and I believe they will hike unless the next CPI report is very tame. But that is highly doubtful.
Cleveland Fed Inflation Forecast
- The Cleveland Fed CPI forecast is +0.36 percent month-over-month with 3.43 percent year-over-year.
- The core CPI forecast is 0.20 percent month-over-month with 2.38 percent year-over-year.
- The more problematic numbers are PCE at 0.35 percent month-over-month and 3.80 percent year over year.
- The core PCE forecast is 0.27 percent month-over-month with 3.40 percent year-over-year.
None of these numbers call for a continued pause.
Only the CPI report will be published before the Fed meeting on September 16.
Inflation has been above the Fed’s target for 65 straight months with credit and stock market bubbles brewing too.
Yields at the long end are likely to surge if the Fed does not hike.
The Blame Game Rotation
- Covid
- The war in Ukraine
- Tariffs
- The war in Iran
It’s Always Something
Right now that “something” is Trump.
This “soon too end something” has gone on for 65 months with the Fed and White House (both parties) offering excuses why it’s transitory.
It’s been transitory alright, but to higher inflation, AI-related credit bubbles, reinsurance bubbles, and stock market bubbles.
Something Will Break
Something will break, guaranteed. And the Fed will get the blame, except for the wrong reason.
The problems are loose credit, easy money, and bubbles, not the hike that is sure to get the blame when something goes wrong.
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Political Realities May Force the Fed to Hike in September
On August 31, I commented Political Realities May Force the Fed to Hike in September
It will be a stretch for the Fed to pause for many reasons, not just the CPI.
Click for Details.
I think you missed the 8th force which is a highly dysfunctional congress and senate and perhaps a ninth force which is the uncertainty of the midterms. Will this be a free and fair election? If the democrats get control should we expect more income taxes and higher government spending? Certainly we should expect even greater dysfunction. As a minimum there will be two more years of BS of some sort likely an impeachment effort and a lot of vetoes.
Crude up $2.50 overnight and Canadian tariffs about to rise bi-laterally.
What could go wrong?
Trump rarely suffers the consequences of his stupidity. Other than the Epstein class the rest of us do.
warsh ain’t hiking coming around the far turn and into the home stretch of the midterm epstein midterms. i’d bet a cheeseburger with fries and a shake, on that.