Congratulations to Trump for Spiking the Price of Oil and Bond Yields
Not everyone has powers like this.
Synopsis
- Trump blockaded the Strait of Hormuz today
- Trump claims the strait is open. The market vehemently disagrees.
- In addition to closing the strait, Trump wants a 20 percent fee for safe passage that the US cannot even supply.
- Iran has successfully hit US escorted tankers.
- As a result, the price of WTIC has surged from $72.70 at 5:32 AM this morning to $79.41 at 8:12 PM this evening.
- That’s an increase of $6.71 per barrel, 9.2 percent in a matter of hours.
- Brent Crude is up from $77.38 to $85.47 in the same timeframe. That’s an increase of $8.09 or 10.6 percent.
Bond Yields
- 30-Year: 5.112 Percent.
- 10-Year: 4.630 percent.
If the long bond yield tops 5.179 percent, it will be the highest since mid-2007.
July Rate Hike Odds
- 8.3 percent a month ago
- 25.7 percent a week ago
- 34.2 yesterday
- 45.4 percent today
September Rate Hike Odds
- At Least One Hike: 77.7 percent
- Two Quarter Point Hikes (July and September): 26.9 percent
- Stand Pat: 22.3 percent, down from 30.4 percent yesterday and 70.5 percent a month ago
Given the odds of two hikes is greater than holding steady, the market has now effectively priced in a hike by September.
For Whom the Toll Bells
Mere Mortals Don’t Have This Power
Congratulations are in order. Mere mortals don’t have this kind of influence on the markets.
So tut-tut to all of you protesting Trump as a king. Trump is not a king. He is a god, and acts like it.
In edit, WTI is now $79.83 poised to be back over $80 soon.
But that’s OK.
On What Basis Is This OK?
Please look at things this way. It’s a small price to pay for Republicans getting crushed in the midterm elections.
At least six Republican seats are in play. Rising oil prices, rate hikes, and more inflation overall will help the cause.
Note: I am not a Democrat and do not align with them on fiscal and other issues. But I have had it with Trump worship, wars, deficit spending, tariffs, and many other issues.
Trump has destroyed the Republican party and will pay a price at the midterms no matter what party you support.
Fees Are OK Now
Please note that a $1 million fee by Iran is not OK but a 30 million fee for safe passage collected by the US is OK.
For discussion, please see Trump Says the US Is the Hormuz Strait Guardian, Will Charge 20 Percent Fee
Instead of paying Iran $1 million per ship, Trump wants 20 percent of cargo.
And Trump cannot even guarantee safe passage!
US Escorts Under Attack
Why Republicans Will Lose the Senate
For further discussion of the election, please see Why I Expect Democrats to Win the Senate in the Midterms Elections
It’s the economy stupid, plus betting markets, Republican infighting, and momentum.