What Does Scott Bessent Know That the Bond Market Doesn't?

Edition · briefing

• Mecca Red Line Saudi coalition spokesman Turki al-Malki said early Wednesday that air defenses destroyed a Houthi drone south of Mecca on Tuesday evening before it entered restricted airspace, calling the Two Holy Mosques a "red line"; Houthis branded the holy-site claim a "worn-out lie," and the Organisation of Islamic Cooperation condemned the "heinous" attacks Wednesday.

• Hormuz Four Preliminary shipping data published Wednesday showed just four Strait of Hormuz commodity transits on Tuesday — two in, two out, and none of them VLCCs or LNG tankers — down from seven a day earlier and far below the 10-day average of 18, undercutting Vice President JD Vance's same-week claim that traffic has recovered to more than half of normal.

• Yanbu Pivot Saudi Arabia has suspended Yanbu loadings and cancelled some late-September European cargoes after the East-West pipeline outage; Brent eased to about $108 early Wednesday after settling at $108.75 Tuesday — its highest since May — as Aramco pivoted to roughly 20 million barrels of prompt Asian sales via ship-to-ship lifts outside Hormuz while Energy Secretary Chris Wright still said the line should resume in "days."

• Beijing Channel Chinese Foreign Minister Wang Yi told Iranian Foreign Minister Abbas Araghchi in Beijing on Wednesday that parties should reopen Hormuz and that China "does not want to see regional tensions spill over further into Yemen and the Red Sea," urging a return to the Islamabad memorandum a week before Xi Jinping's expected Washington summit with President Trump.

• Warsh Bind The 10-year Treasury yield cooled to about 4.99% early Wednesday after touching roughly 5.04% Tuesday — its highest since July 2007 — as the FOMC decision lands later Wednesday with markets pricing about a 90% chance of a quarter-point hike, the first under Chair Kevin Warsh, against President Trump's calls for cuts.

• Tariff Truce Bloomberg reported Wednesday that Washington and Beijing are discussing reciprocal tariff cuts on roughly $30 billion in goods — including U.S. energy and farm exports and Chinese manufacturing inputs — ahead of the Sept. 24 Trump–Xi summit; Treasury Secretary Scott Bessent said he will meet Vice Premier He Lifeng this weekend to lock in the package and press Iran finance.

• War Powers Rebuke The House voted 220–204 late Tuesday to direct the removal of U.S. forces from hostilities with Iran — the chamber's third such resolution this year — with seven Republicans joining all Democrats; the measure faces long Senate and veto odds even as a CBO tally put direct war costs near $38 billion through early August.

• Diesel Record AAA said the U.S. national average diesel price hit a record $6.27 a gallon Tuesday as the Saudi pipeline outage and Hormuz squeeze tightened the fuels market, a midterm-season cost shock for trucking and farm belts with California averages above $8.