U.S. gas prices hit a record $4.43 per gallon for September, driven by the ongoing war in Iran. Market strategist Charlie Bilello warns that this energy surge adds a $100 billion burden on consumers, signaling that the broader inflation problem is far from over.
War Drives Energy Prices Higher
Crude oil has crossed $100 a barrel following the prolonged war in Iran over the Strait of Hormuz. At the last check, Brent Crude futures were down 2.10% to $102.63, and WTI Crude futures were down 1.67% to $100.21 per barrel.
The disruption has pushed U.S. gasoline prices up 45% to $4.35 a gallon on Thursday, while diesel has surged 67% to a record high above $6 a gallon.
Jet fuel and agricultural commodities like wheat, corn, and fertilizer have also spiked. Bilello emphasizes that elevated energy and transportation costs will “take time to feed” into broader consumer prices.
A $100 Billion Burden on Consumers
The surge in fuel costs represents an added burden on American households exceeding $100 billion. This burden far outpaces the projected $69 billion Americans will spend this year on nursery, elementary, and secondary education combined.
Bilello points out that consumer prices have risen at a 4% annualized rate since January 2020, roughly twice the Federal Reserve’s 2% inflation target, even as the Cleveland Fed projects September CPI inflation could reach 3.49% to 4%.
Recent data show the pressure on purchasing power: real average hourly earnings fell 0.1% in August and were down 0.3% from a year earlier, according to the Bureau of Labor Statistics.
The Fed’s Tightening Dilemma
Rising energy prices have forced the Fed to adjust policy. Under Chairman Kevin Warsh, the Fed unanimously raised the federal funds rate by 25 basis points to a range of 3.75% to 4.00%. Warsh noted that “the plain fact is that inflation is too high and has been for too long.”
With the 2-year Treasury yield trading near 4.69%, Bilello notes the market signals the Fed remains behind the curve. He argued that persistently elevated energy prices could keep upward pressure on inflation and interest rates unless oil prices fall sharply.
How Have Stocks and Bonds Performed in 2026?
At the last check, the 30-year Treasury bond yielded 5.28%, the 10-year Treasury bond was at 4.94%, and the two-year bond was at 4.69%.
The primary ETF specifically tracking the long end of the U.S. Treasury yield curve—including the 30-year benchmark bond—is the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), which closed 1.11% higher at $81.78 on Thursday. It was down 6.92% year-to-date, up 0.53% over the last month and 9.25% over the last year.
The S&P 500 index has advanced 11.36% year-to-date. Similarly, the Nasdaq Composite index was up 13.70%, and the Dow Jones gained 7.02% YTD.
On Thursday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed higher. SPY rose 1.13% to $762.60, while QQQ rose 1.73% to $716.92. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), also ended 0.61% higher at $518.35.
In premarket on Friday, SPY was up 0.30%, QQQ gained 0.53%, and DIA advanced 0.17%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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