Dollar Gains Ground as Oil Shock Pressures Stocks and Yields

Brent crude briefly approached $110 a barrel on Monday, pushing the 10-year Treasury yield to 5% and giving the dollar a fresh safe-haven bid as investors pulled back from risk. The move left global markets juggling three forces at once: an energy shock, higher borrowing costs and renewed anxiety over growth-sensitive assets.

The dollar index rose roughly 0.5% to 99.59, its highest level since September 2, according to Reuters. The greenback also strengthened against the yen, which has been especially vulnerable because Japan imports more than 90% of its energy. The dollar climbed about 0.6% to 154.46 yen, while the euro weakened against the U.S. currency.

Oil supplied the immediate catalyst. Brent settled at $105.68 a barrel after trading near $110, while U.S. West Texas Intermediate changed hands above $101 during the session. Prices have risen sharply as fighting in the Middle East threatens to restrict crude flows through the Persian Gulf, with uncertainty over shipping through the Strait of Hormuz adding a geopolitical premium.

That premium is feeding directly into bond markets. Higher fuel costs threaten to keep inflation elevated, making investors less confident that central banks can ease policy even as economic momentum weakens. The benchmark Treasury yield briefly reached 5% for the first time since 2023, a level that raises the discount rate applied to future corporate profits and tends to weigh hardest on long-duration technology stocks.

U.S. equities absorbed the pressure unevenly. The S&P 500 fell 0.5%, the Dow slipped 0.3% and the Nasdaq Composite lost 0.6%. Chip and artificial-intelligence shares led the retreat after prominent technology executives warned that development may need to slow for safety reasons, while energy stocks benefited from the crude surge.

The dollar’s rise is therefore more than a conventional flight to safety. It reflects demand for U.S. liquidity, expectations for firmer interest rates and the relative advantage enjoyed by the United States as a major energy producer. For import-heavy economies, the combination is harsher: costlier fuel, a weaker currency and less room for policymakers to cushion the slowdown.