Stocks Are the Safe Haven, Not Bond ETFs, as Oil Hits $122
The Fed held rates steady and oil ripped past $122 on Wednesday, but it was the bond market that took the hit while stocks barely flinched.
Treasury bond ETFs sank Wednesday after the Fed held rates steady and oil prices surged on news that the U.S. won't lift its blockade of Iran until Tehran agrees to a nuclear deal.
The yield on the 10-year Treasury note was last trading at 4.43%, its highest level in nine months. The 30-year yield topped 5% for the first time in nine months as well. 
The iShares 7-10 Year Treasury Bond ETF (IEF) fell 0.5% and the iShares 20+ Year Treasury Bond ETF (TLT) dropped 0.8%, leaving both funds down on the year, though by less than 1%.
Wednesday was Powell's final press conference before Kevin Warsh takes over as Fed chair. The outgoing chair signaled he plans to remain on the Board of Governors even after the transition, at least until the investigation into him is fully resolved.
"I've said that I will not leave the board until this investigation is well and truly over with transparency and finality," Powell said, adding that he'll step down when he thinks the time is right.
The FOMC voted 8-4 to hold rates steady. One official wanted a cut, while three wanted more hawkish language in the statement, arguing that the current wording leans too dovish by hinting that the next move would be a cut. In other words, three of them are more worried about inflation than the rest of the committee.
That concern fits with the other big story Wednesday: oil. Brent crude topped $122 a barrel, the highest level since 2022 and the highest since the U.S./Israel/Iran war began. The trigger was news that Trump won't end the U.S. blockade of Iran until Tehran agrees to a nuclear deal. The United States Brent Oil Fund (BNO) extended its massive 2026 gains to 108%.
Both sides remain at a stalemate, with the closure of the Strait of Hormuz disrupting more than 10 million barrels of supply per day.
Interestingly, the stock market doesn't seem to care all that much. The S&P 500 was essentially flat on the day and is sitting near all-time highs, with the AI boom apparently a bigger factor than geopolitical risk. Year to date, the Vanguard S&P 500 ETF (VOO) is up 4.7%.
In other words, stocks are up solidly while bonds are down on the year. Who would have thought a war disrupting this much of the world's energy supply would leave stocks acting like the safe haven while bonds take the hit? Counterintuitive, to say the least.
