Asian stocks fell 0.7% today, US index futures lost 0.2%, and the 10?year US Treasury yield rose four basis points to 5.02% — the highest level in nearly two decades. European markets opened lower, and the global MSCI All?Country World Index is moving toward its fifth decline in six sessions. The dollar strengthened against all major currencies, extending gains after its best single?day jump in more than two months in the prior session.

Market pressure intensified on the oil shock: Brent added 1.4% to $107.10/bbl amid supply?risk concerns in the Middle East and the continued shutdown of a Saudi pipeline after recent attacks. Rising energy prices, together with the sell-off in Treasuries, also dragged down bond markets across the Asia?Pacific region. Expensive oil benefits exporters and Iran — which sees rising prices as a partial offset to Western sanctions — while consumers and central banks in developed economies are hurt, because energy again becomes a source of inflationary pressure. Gold stayed just below $4,300/oz after falling more than 1% the previous day to a five?week low. The mechanism is straightforward: higher oil lifts inflation expectations, which strengthens bets on Fed tightening, and higher yields make non?yielding gold less attractive.

It's clear that the stakes have risen for Fed Chair Kevin Warsh. At the annual symposium in Jackson Hole, his remarks lowered the bar for rate hikes and the FOMC's decisions to incoming data. So, skipping a rate hike on Wednesday would risk institutional credibility and could push long?end yields even higher. An expanding fiscal deficit, record supply of government debt, and heavy financing needs for AI investments are forcing investors to demand a bigger term premium on long bonds.

Higher bond yields are beginning to compete with stocks for investor capital, calling into question the rally that had been supported by robust AI earnings and economic resilience. Psychologically, the 5% threshold matters — at this yield level equity markets are likely to face trouble. If yields rise further, investors will start rotating into bonds, which could trigger a sharp correction in US stocks.

In my view, the combination of expensive oil, the still?offline Saudi pipeline and hot inflation leaves the Fed little room to pause on Wednesday. That implies further dollar and short?rate strength, while gold and long bonds will likely remain under pressure at least until the meeting's outcome. If the 10?year yield tests 5.25–5.5%, the selloff could spread to the AI sector, where debate over development pace has already become an additional risk factor.

Technical note on the S&P 500: today's primary task for buyers is to reclaim immediate resistance at 7,607. Doing so would signal upside and open the way to 7,633. Equally important is holding control above 7,656 to strengthen the bulls' case. On the downside, buyers must defend the 7,574 area; a break there would quickly drive the index back to 7,563 and open the path to 7,546.