On the Street Monthly – Oil Is Back Above $100
On The Street NewsletterSeptember 2026
Oil Is Back Above $100
Inside: Why This Oil Spike Feels Different, the Gap Between Headline and Core Inflation, and How Far the Bond Market Has Already Moved.
Commodities
Oil Is Back Above $100
WTI crude, January month-end
$65.21
Where the year started
WTI crude, September 14
$102.30
Back above $100 again
Crude oil started the year near $65 a barrel. By the end of March it was above $100, by the end of June it was back under $70, and over the past two weeks it has climbed above $100 again. The latest move followed an attack that forced Saudi Arabia to shut its East-West pipeline, the line that carries crude to the Red Sea and bypasses the Strait of Hormuz. Reuters estimates roughly 4% of global supply is at risk while it is offline.
The chart below shows where oil finished each month this year, drawn from the same data behind our Market Snapshot.
WTI Crude Oil, Month-End Price (2026)
(peak)
(low)
Source: FactSet Research Systems. Selected month-end prices; vertical scale begins at $60.
What stands out to us is not the spike but how differently the market is handling it. When oil first ran past $100 in March, the S&P 500 fell 5.1% that month, the index was down 4.6% for the year, and the VIX closed above 25. This time the reaction has been far calmer. Stocks finished August up 12.3% for the year with the VIX under 15. Energy shocks still matter, but companies and consumers have now had six months to adjust to expensive oil, and that adjustment appears to be absorbing much of the blow.
Inflation
Two Inflation Rates, Two Different Stories
Headline inflation
3.4%
Above the Fed’s 2% target
Core inflation, August
2.4%
Lowest reading since March 2021
Inflation is running at 3.4%, comfortably above the Fed’s 2% target, and that is the number that makes headlines. Take food and energy out and the picture changes. Core inflation fell to 2.4% in August, the lowest reading since March 2021.
The chart below shows both measures. They sat on top of each other in January. The gap that opened in the spring is almost entirely energy.
Inflation, Year-Over-Year (August 2026)
(August)
(ex-food & energy)
Source: U.S. Bureau of Labor Statistics. The Fed’s target is 2%.
Energy is only about 7.5% of the basket used to calculate inflation, but it has done most of the damage. Gasoline is up 27.4% over the past year and accounted for more than a third of August’s monthly increase. The rest of the basket is behaving.
That leaves the Fed with an uncomfortable decision on September 16, and futures markets now put high odds on a quarter-point increase. The worry is not the 2.4%. It is that a second year of $100 oil convinces people that higher inflation is here to stay. A rate hike cannot produce a barrel of crude, but it can keep expectations anchored, and that appears to be the argument winning inside the Fed.
Fixed Income
The Bond Market Already Moved
10-year Treasury yield
4.95%
Highest since late 2023
30-year Treasury yield
5.37%
A level not seen since 2007
The Fed has not changed rates once in 2026. The bond market has not waited.
The 10-year Treasury yield ended January at 4.58%, dropped to 3.97% in February as investors crowded into safe assets, and has climbed almost without pause since. It reached 4.95% last week, the highest since late 2023. The 30-year is at 5.37%, a level it has not seen since 2007.
10-Year U.S. Treasury Yield, Month-End (2026)
(low)
Source: FactSet Research Systems, U.S. Department of the Treasury. Selected month-end yields; vertical scale begins at 3.50%.
This is why bond returns have been frustrating. When yields rise, the price of the bonds you already own falls, which is how investment grade corporate bonds end up down 1.00% for the year while still collecting interest.
It helps to separate the two halves. The price decline is real but temporary, and it reverses as bonds mature at par. The yield is the part that governs what comes next, and money going into high quality bonds today is locking in the most attractive starting point in years. For clients drawing income, that is a far better deal than it was two years ago.
Data
Market Snapshot
For the month ending 8/31/2026 (cumulative returns)
| 1-Month | 3-Month | YTD | 1-Year | |
|---|---|---|---|---|
| Dow Jones Industrial Average | 1.34% | 4.22% | 10.66% | 16.78% |
| S&P 500 | 2.62% | 1.40% | 12.28% | 18.98% |
| NASDAQ Composite | 3.93% | -2.23% | 13.46% | 22.91% |
| U.S. Mid Cap | 1.85% | 5.99% | 20.04% | 21.29% |
| U.S. Small Cap | 1.14% | 4.19% | 16.30% | 21.72% |
| 1-Month | 3-Month | YTD | 1-Year | |
|---|---|---|---|---|
| Nikkei 225 | 3.03% | -0.03% | 31.73% | 55.23% |
| Hang Seng | -1.23% | 1.53% | -0.25% | 1.95% |
| Shanghai Composite | 4.02% | -2.02% | 0.44% | 3.33% |
| FTSE 100 | -0.40% | 3.99% | 8.99% | 17.82% |
| DAX | 2.45% | 4.59% | 7.22% | 9.86% |
| 1-Month | 3-Month | YTD | 1-Year | |
|---|---|---|---|---|
| Corporate Bonds | 0.39% | -1.75% | -1.00% | 1.20% |
| Municipal Bonds | -0.24% | -1.14% | -0.03% | 3.88% |
| High Yield Bonds | 0.90% | 0.84% | 2.45% | 4.63% |
| Rate | |
|---|---|
| 10 Year Treasury | 4.75% |
| Fed Funds (Effective) | 4.21% |
| Inflation Rate | 3.40% |
| Unemployment Rate | 4.10% |
| Value | |
|---|---|
| WTI Crude Oil | $85.76 |
| Gold ($/oz) | $4,481.50 |
| U.S. Dollar Index | 99.43 |
| CBOE Volatility Index | 14.92 |
Source: FactSet Research Systems Inc.; YCharts, Inc.; U.S. Bureau of Labor Statistics. Corporate Bonds, Municipal Bonds and High Yield Bonds are presented via representative iShares ETFs (LQD, MUB, HYG). Past performance is no guarantee of future results.
In the News
Articles We’re Reading
- Anthropic CEO Amodei calls for a slowing of frontier AI development on safety concerns; Altman and Musk back the move. FT, BBC, X
- OpenAI CEO Altman rules out an IPO this year due to ‘unacceptable’ safety risks. Reuters
- Iran set to unveil a deal on a temporary shipping lane through Hormuz on Monday. Bloomberg
- Up to 4% of global oil supply is at risk if Saudi Arabia cannot quickly restart the East-West pipeline. Reuters
■ Did You Know?
A barrel of oil is 42 gallons, and that number came from the fish trade.
That number was not chosen by anyone designing an oil industry. Long before Pennsylvania, English coopers built a standard watertight cask called a tierce that held 42 gallons, used to ship herring, salmon, wine, molasses and butter. When Edwin Drake struck oil in 1859, nobody was manufacturing containers for crude, so the industry simply used the casks that already existed. Producers meeting in Titusville agreed on 42 gallons in August 1866, the Petroleum Producers Association made it the standard in 1872, and the federal government recognized it in 1882. The two gallons above the more common 40-gallon barrel were a hedge, since crude leaked and evaporated on the wagon ride to the refinery and the buyer still expected a full 40. Filled with crude, one weighed a little over 300 pounds, about as much as a man could wrestle onto a wagon. Oil has not actually shipped in barrels for more than a century. When Brent crossed $108 this month, it was still being priced in a container built for herring.
Presented by the Investment Committee of Lake Street, an SEC Registered Investment Adviser.
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