Seth Freeman's Market Dichotomy: 10-Year Bond Yields 'Attractive' At 5%, Yet No Relief From Oil Shock

Escalating energy costs, persistent inflation data lags, and elevated US Treasury yields are likely to keep global markets on edge, according to Seth R. Freeman, Senior Managing Director at GlassRatner Advisory & Capital Group. In an exclusive interview with NDTV Profit on Monday, Sept. 21, Freeman highlighted that while elevated interest rates are creating compelling opportunities in fixed-income markets, industries worldwide remain vulnerable to renewed supply and cost shocks.

US Treasury yields surged as investors continued to look for clues on the trajectory of monetary policy. The yield on the benchmark 10-year Treasury note climbed above 5% on Friday, rising five basis points to 5.006%. One basis point is equal to 0.01%, and yields and prices move in opposite directions. The yield on the 10-year Treasury had hit 5.041% last week, its highest level since 2007.

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Attractive Entry Points for 10-Year Bonds

Freeman indicated that market consensus still points toward interest rates rising by another quarter point as the US Federal Reserve continues balancing employment and inflation indicators. Because inflation metrics are backward-looking and take considerable time to reflect cooling trends, bond yields are expected to remain elevated for the foreseeable future.

However, Freeman noted that current yields represent a solid opportunity for long-term fixed-income allocators. "5% is high, and for US investors who live in high state-tax states, it's actually equivalent to about 6% to 6.25%," he explained. "That's very attractive in terms of investors being able to buy 10-year bonds at those rates,'' Freeman told NDTV Profit.

US Treasury Yields Trend
Photo Credit: Echion

Oil Uncertainty, Severe Diesel Pressures

Addressing the global crude market, Freeman noted that celebrating oil trading just under triple digits reflects how constrained the supply landscape remains. He pointed out conflicting global reports regarding actual crude transit volumes through critical shipping routes such as the Strait of Hormuz. Beyond headline crude benchmarks, Freeman emphasized that the broader economic danger lies in refined fuels. "The impact is really severe when it comes to diesel and diesel prices-not just in the US, but globally.''

The Brent contract for November was at $102.09 per barrel, down $1.78, or 1.71%, after settling 0.91% lower on Friday. The WTI October contract that is expiring on Tuesday fell $1.97, or 1.96%, to $98.33 per barrel following a 1.58% drop in the previous session. Iran and the US exchanged new threats on Sunday, although Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the United Nations General Assembly.

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Supply Shocks: Agriculture and Input Costs

On whether corporations can absorb or pass along higher input expenses without hurting equity valuations, Freeman cautioned that certain sectors face an inevitable lag in price transmission. He specifically pointed to the agricultural supply chain, where elevated input costs — particularly fertilizers — have burdened farmers without yet being fully passed through to end-consumers.

The agriculture and manufacturing sectors have been hit since the onset of the geopolitical conflicts. While a few US firms began experiencing marginal tailwinds from tariff adjustments, higher energy and commodity costs threaten to erase those gains. "I think we're going to see no relief, and the presumption that we may see some shock in certain categories is going to come true," Freeman concluded.

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