Wealthion Macro Bites – Global Bond Markets Reprice as Energy and AI Growth Collide

The world's largest sovereign bond markets are having their worst month in years as soaring energy costs fan inflation and the ​AI boom lifts economic growth, leaving investors positioning for an era where interest rates stay higher for longer.  Two-year Treasury yields have surged ‌60bps in September and are poised for the biggest monthly jump since early ‘23.  Two-year borrowing costs in France, Germany, U.K. and Australia are set for their biggest monthly jumps since the energy shock related to the March onset of Iran hostilities.  Japanese government bond yields are pinned at multi-decade highs.

JPMorgan analysts estimate that during the past 5 days, the 10-day average for total oil exports through the Strait of Hormuz averaged 20.5M bpd (89% of ‘25 levels) after Saudi Arabia ramped up shipments along a vital pipeline that exports barrels from its Red Sea ports in recent days.  This contention is supported by data from analytics firm Kpler, and traders and shipowners are privately reporting they are seeing large volumes of oil hitting the market from Hormuz.

India’s Ministry of Steel Secretary Sandeep Poundrik announced that India's new steel policy is a roadmap for the ​next two decades planning 600Mt of steelmaking capacity by 2047 (from just 220Mt in fiscal ’26).  The policy also details plans to cut sector emissions and shore up access to ​iron ore and coking coal to meet anticipated demand.  India imported a net 3.5Mt of finished steel in the April-August period +29.5% y/y).  China was the top exporter of finished steel to India during the period (accounting ​for 31.8% of imports).

DRC’s Director General of the Authority for the Regulation of Subcontracting Beleshayi Kasanda Ted announced all major mining companies will be subject to annual audits of subcontracting practices and compliance with local-content requirements beginning 1/1/27, as authorities of the world’s largest cobalt producer and Africa’s top copper producer step up oversight of its mining sector as it seeks to channel more contracts and procurement spending to local companies Authorities are drafting sector-specific rules for mining and other industries that will include sanctions and mandatory three-year compliance plans.

Following establishment of a domestic gold trading platform, South Korea's central bank plans to purchase roughly 1t of gold on 12/14/26 (valued at 200B won).  This marks the first physical gold acquisition by the bank in 13 years and follows the bank’s indirect gold investments earlier this year in acquiring $250M of gold ETFs.  The gold being purchased is likely sourced from local producers who had intended to export it, allowing the central bank to make payments in won without tapping into foreign reserves.  At end-August, the Korean central bank held 104.4t of physical gold (valued at approximately $14.88B).

New York Fed President John Williams [Permanent FOMC Voter] said one additional rate hike “late this year” may be appropriate to contain inflation. “With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information.”  Fed funds futures promptly reduced probabilities of an October rate hike from 68% to 45%.