Markets can't ignore the war anymore
Oil prices are heading back toward $100 a barrel, and, perhaps more crucially, the price of diesel fuel futures is now sitting at an all-time high.
Why it matters: Investors are starting to recognize that higher oil prices from the Iran war aren't something they can continue to ignore.
The big picture: Higher energy prices are showing up across the economy, driving up costs for companies, regular people and even governments around the world that are now facing higher borrowing rates.
The rising price of energy is a big factor pushing bond yields higher and worrying policymakers in the U.S. and the rest of the developed world.
Catch up quick: After falling off initial early war highs, oil prices started rising in July.
At the time, attacks on commercial vessels in the Strait of Hormuz reignited fighting and President Trump said the "memorandum of understanding" the two countries had signed weeks before was "over." State of play: Over the past few days, tensions have intensified .
The price of a barrel of Brent crude oil, the global benchmark, was trading at $95 on Wednesday afternoon, up from the low $80s a month ago.
By the numbers: The yield on the 10-year Treasury — a benchmark for mortgages and other loans — was hovering at around 4.8% Wednesday, after touching its highest level in nearly three years.
Follow the money: Government bond yields around the world are also at multiyear highs.
The U.K.'s 10-year gilt hit its highest level since 2008; Germany's long bond rose to its highest since 2011.
And the government bonds of Japan, an importer of oil vulnerable to energy price shocks, touched their highest level since 1996.
Stocks have moved basically sideways over the past week.
How it works: The rise in oil prices is driving up inflation expectations, as people expect higher energy costs to drive up both the cost of making things and the cost of moving those things from place to place.
That's impacting government bond yields, as investors demand more interest to compensate for inflation eating away at the value of their money.
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