September 15: Oil Drives Global Yields

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Update

September 15, 2026 09:58 PM GMT

Global Macro Commentary | Global

Morgan Stanley & Co. LLC

Molly Nickolin

Strategist

September 15: Oil Drives Global

Yields

Lingdi Xu

Economist

Sofia Palacios

Strategist

Oil rose on renewed supply concerns; 10y UST yields touched

the highest since 2007; 20y auction tailed; JGBs bear-steepened;

KRW underperformed; Bitcoin fell 4.1%; DXY at 99.65 (+0.3%);

US 10y at 5.00 (+1.4bp).

Higher energy prices reinforced inflation concerns and pushed global long-end

yields higher ahead of Wednesday’s Fed decision, strengthening the dollar and

weighing on equities and EM FX.

Developed Markets

• US rates bear-steepened (2y: +0.5bp; 30y: +2.2bp), with the 10y yield

briefly reaching 5.04%, its highest level since 2007, before closing at

5.00%. Energy prices remained the primary macro catalyst as renewed

Middle East supply disruptions pushed Brent 2.7% higher to $108.50/bbl and

Morgan Stanley Asia Limited+

Gek Teng Khoo

Strategist

Morgan Stanley MUFG Securities Co., Ltd.+

Hiromu Uezato

Strategist

Morgan Stanley Asia Limited+

Luyao Liu

Strategist

Morgan Stanley & Co. International plc+

Jasper Knyphausen

Strategist

WTI up 4.4% to $105.83/bbl. Front-end inflation compensation reflected

some of that pressure, with 2y breakevens widening 2.8bp while longerdated breakevens were little changed. Markets entered Wednesday’s FOMC

decision pricing roughly a 94% probability of a 25bp hike from the current

3.50-3.75% range. September Empire manufacturing activity slowed to 7.6

from 20.6 and undershot expectations, although elevated prices-paid

measures limited the rates response.

• Treasury supply added pressure to the long end after the $13bn 20y

reopening tailed by 2bp, stopping at 5.420% against a 5.400% whenissued yield. The result marked the highest auction yield since the 20y tenor

was reintroduced, while the 2.57 bid-to-cover ratio was slightly stronger than

the prior sale. Investor sponsorship was weaker, with indirect bidders taking

52.5%, while direct bidders absorbed a larger share at 30.7%. The auction

reinforced the session’s steepening bias as investors continued to demand

…