📌 Rising Oil Prices and Long-Term Bond Yields Test Assets
As tensions between the United States and Iran have escalated, oil prices have risen above USD 90, while 30-year U.S. Treasury yields have also reached highs not seen since 2007. With both changes occurring at the same time, what merits attention is not only energy prices themselves, but also the possibility that the energy shock could continue tightening the macro environment through inflation expectations and higher long-term financing costs.
This is less favorable for high-duration assets. Higher duration means that a larger portion of a company’s value depends on more distant future cash flows; when long-term interest rates rise, the discounting pressure on these cash flows becomes greater. The original view also notes that AI and storage stocks remain strong, indicating that the market is currently clearly diverging rather than all risk assets weakening in tandem.
Integrated companies in the energy chain have a different profit structure. If Brent crude remains strong and crack spreads stay elevated, upstream crude oil, midstream pipelines, and refining businesses can all enjoy favorable earnings conditions simultaneously. AntonLaVay views CVX breaking through a key resistance level as a signal that this logic is beginning to be traded, but technical patterns are not proof that earnings have been realized.
The key variables remain whether oil prices and crack spreads can be sustained. If oil prices retreat, or refining profits are compressed, the relative advantage of integrated companies will also weaken; if long-term yields continue to rise, the divergence among assets may widen further.
▌ Sources