Oil, the Fed and Big Tech’s Borrowing Binge Push US Borrowing Costs to a 19-Year High

London, 28 September 2026 — EBM Newsdesk Analysis — By Paul James

On Monday, 28 September, the yield on the 10-year US Treasury hit 5.23%, its highest level since June 2007. It came after President Trump rejected an Iranian proposal to restart peace talks and oil jumped around 3% in early European trade. The Wall Street Journal reported that Trump has told insiders he expects to resume bombing Iran after November’s midterm elections. The surprise is that part of the pressure on US government debt is coming from Silicon Valley rather than the Pentagon.

For Europe, the damage runs through the dollar. Higher US yields and the dollar’s status as the world’s safe haven are pulling money towards America. The euro lost ground to the dollar this morning even as sterling and the yen gained. A weaker euro makes every barrel of dollar-priced oil more expensive for European importers, just as energy markets turn volatile again. The European Central Bank now faces imported inflation it did not create and cannot easily control.

Why Treasuries are selling off

Three forces are pushing yields higher at once. The first is oil. Higher energy costs feed inflation, and inflation erodes the value of a fixed bond payment. Diesel has been hit hardest because US refineries are running close to full capacity.

The second is the Federal Reserve. The CME’s FedWatch Tool now puts a 94% chance on at least one more quarter-point rate hike before the end of the year. It gives a 70% chance that the hike comes at the Fed’s next meeting at the end of October.

The third is the one few people expected. The big AI companies are borrowing heavily to build data centres, because the bills now far exceed their free cash flow. That corporate debt competes with Treasuries for the same pool of investor money. Governments are no longer the only big borrower in town, and they are paying for it.

Dollar firm, yen fights back

The cash Dollar Index clawed back some of Friday’s losses but stayed below 101.00. On Thursday it touched 101.10, a near two-month high. Earlier in September it came close to a four-month low. It then formed a double bottom and rallied 2.7% over two weeks.

The yen started weak, then turned. USD/JPY fell to 156.50, its lowest in a week. Japan’s Finance Minister, Satsuki Katayama, and US Treasury Secretary Scott Bessent said the two countries stand ready to act together again on yen weakness. Katayama said last week that Trump raised the yen with Prime Minister Sanae Takaichi at the UN General Assembly.

Stocks, Bitcoin and gold

US stock futures fell sharply, with the Nasdaq 100 down more than 1%. That follows a strong week. The Nasdaq rose 2.1%, the S&P 500 1.2% and the Dow 0.3%, while the small-cap Russell 2000 fell 0.8%. Equities have held up well given the climb in yields, though Monday tested that resilience.

Bitcoin slipped around 2% overnight towards $82,000, a former ceiling that now acts as a floor. It hit a near eight-month high above $87,000 last week. If it holds above $80,000, the bulls keep control.

Gold had a worse night. It gapped lower and broke through $4,200, finding buyers only around $4,150. It needs to win back $4,200 quickly. If not, $4,000 an ounce is the next real test. The stronger dollar is the problem, because it makes gold more expensive for everyone else.

Oil: volatile, not yet explosive

Brent and WTI gapped higher as trading reopened. Trump said US negotiators could still join talks this week, which kept a lid on panic. Yet the Saudi-led coalition in Yemen said it intercepted missiles and drones fired by the Iranian-backed Houthis at Saudi targets on Saturday.

Crude has not hit fresh records. The pain is in refined products. Last week Trump even floated curbing US diesel exports to cap domestic prices. That would hurt the Asia-Pacific countries most reliant on imported fuel, and it would tighten the market for European buyers competing for the same cargoes.

The week ahead

Wednesday brings Core PCE, the Fed’s preferred inflation gauge, and the ADP private payrolls report. Micron reports after the close that day. OpenAI holds its developer day on Tuesday, Nike reports on Thursday, and the official non-farm payrolls figure arrives on Friday. Several Fed speakers will also be on the wires.

Where This Goes

A 5.23% Treasury yield is not a blip. It is the price of war risk, sticky inflation and an AI boom that now runs on borrowed money. Until the Strait of Hormuz reopens, the dollar stays strong and bonds stay under pressure. Europe gets the worst of both: dearer energy and a weaker currency to pay for it. I would not bet on relief before the October Fed meeting.