Crude round-tripped on Monday while Treasury yields, the dollar and gold's decline all held their direction, a split that points the bond selloff away from energy prices alone.
Monday started as an oil story. By the afternoon it had become a rates story, and the two had separated.
West Texas Intermediate crude traded near $95.60 a barrel before the U.S. open, up about 3.5%, after President Trump rejected Iran's seven-day plan to reopen the Strait of Hormuz over the weekend. By midafternoon it was near $92.50, roughly unchanged on the day. Brent, the international benchmark, climbed toward $108 during Asian trading, fell as low as about $104 around midday and was near $105.30 in the afternoon, up about 1%.
The turn came around midday, when White House officials signaled that sanctions relief for Tehran was possible if it made "concrete progress" on its nuclear program. Prices firmed again once Saudi Arabia's East-West pipeline was back in service for exports. Trump has also said he expects talks with Tehran to resume this week.
What did not reverse
The 10-year Treasury yield rose about 8 basis points to near 5.25%, on track for its highest close since July 2007. It touched about 5.27% intraday. The 30-year bond yield traded near 5.57%, around its highest level since 2004. The two-year note, the maturity most tied to Federal Reserve expectations, rose about 6.5 basis points to near 4.93%.
Gold futures fell about 3.5% to near $4,169 an ounce, and silver fell about 5%. The dollar index rose about 0.15% to 101.12, extending a gain of about 1.7% over the past month. Newmont, the largest U.S. gold miner, fell more than 4%.
Those three moves, higher yields, a firmer dollar and weaker precious metals, are consistent with one another. Each is what a market repricing toward more Fed tightening would produce. None of them followed crude back down.
The real-yield question
The makeup of this year's bond selloff supports that reading. Through Friday, the 10-year yield had risen about 100 basis points in 2026, while the 10-year breakeven inflation rate, a market gauge of expected inflation, had risen only about 9 basis points. That leaves roughly 90 basis points of the move in real, inflation-adjusted yields. A selloff driven mainly by oil would be expected to show up more heavily in inflation expectations.
Mohamed El-Erian, chief economic adviser at Allianz, argued the same point on Monday. "The fundamental issue I want to stress is that we would be having this yield discussion, even if oil prices were lower," he said, pointing to "an imbalance in longer-term demand for bonds and longer-term supply of bonds."
Stocks took the rates move harder than the oil move. The S&P 500 was down about 0.6% near 7,698 in afternoon trading, the Nasdaq Composite about 0.7% and the Dow about 0.5%, all off their morning lows after the sanctions report.
Two readings
One view is that the oil fade shows traders treating the rejection as a negotiating position rather than the end of diplomacy, and that energy is no longer the main driver of yields. The other is that a single session's reversal says little about a conflict now in its eighth month, and that Brent above $100 still feeds the inflation data the Fed is watching.
This week's calendar will test both. The August personal consumption expenditures price index, the Fed's preferred inflation gauge, is due Wednesday, and the September jobs report on Friday. If yields hold near 5.25% after a soft inflation print, the case that the bond market has moved beyond oil gets stronger.