Brent tops $108 and the 10-year yield hits 5%

Oil jumped on Monday after a drone attack shut Saudi Arabia’s East-West pipeline, which can carry 7 million barrels a day. Brent crude reached $108 before easing to about $107, and WTI rose above $103.

The outage could remove about 4% of global supply, on top of disruption in the Strait of Hormuz since the war with Iran began in February. A planned meeting between Gulf states and Iran in Oman was postponed.

The bond market felt it on Tuesday. The 10-year Treasury yield closed at 5.00%, its first close at that level since July 2007, as investors priced a Fed hike at Wednesday’s meeting.

Higher oil feeds straight into inflation. Gasoline prices in August were 27.4% higher than a year earlier.