What moved
The ten-year Treasury closed at 4.96 per cent on 22 September, its highest since 2007. The move drew comparisons with April 2025, when the tariff announcement took it from 4.01 to 4.48 per cent in five sessions. The Federal Reserve raised rates on 16 September, its first increase since 2023, with a further rise priced for October. Brent settled near $103 as Middle East talks stalled.
Why it matters for pricing
There are two kinds of rate shock and they are not interchangeable.
The financial crisis and the pandemic were systemic. Nobody chose them, everybody was hit, and both produced long, slow regimes — the Fed held near zero from December 2008 to December 2015, and again from March 2020 to March 2022. Thirteen of the last eighteen years were spent at the floor. You could price into that, because it lasted.
The past eighteen months are different in kind. A tariff announcement moved the base leg of every USD price by forty-seven basis points in five sessions. A conflict in the Gulf, and talks that did not deliver, have done it again. These are not cycles. They are decisions, taken in rooms, effective immediately, with no economic precursor and no obligation to mean-revert.
That changes where the risk lives. A cyclical turn announces itself in the data — inflation prints, payrolls, output — and a benchmarking exercise picks it up eventually. A discretionary one appears in no dataset until after it has happened, and it can repeat at any interval, because the constraint is political will rather than the business cycle. You cannot search for it. You can only watch for it.
Which is the work. We spend our time on the policy, the politics and the market plumbing that turn a decision into a base rate, because that is what determines whether a price set today survives the year. Pulling a rate takes minutes and returns the same number whoever runs it. Knowing what is holding it there, and what would move it, does not.
Our call. Discretionary policy, not the cycle, sets the USD base leg into 2027. Price on the day, document why, and assume the next move arrives without notice.
What this means for your business
- Record the date and the reason. Note the conditions on the day you priced and why the rate sat there. A number without a rationale is one you defend from memory.
- Test the shock, not the range. If the base leg moves fifty basis points overnight, which facilities reprice, and what does that do to the file?
- Stop rolling forward. A renewal is a new transaction, against a market that may have turned twice since the last one.
- Watch the policy, not the print. By the time a discretionary move shows up in the data you are pricing history. That monitoring is what we do.
Sources
US Department of the Treasury, daily par yield curve rates (4 and 11 April 2025; 22 September 2026). Federal Reserve, FOMC statements, December 2008, March 2020, March 2022 and 16 September 2026. Brent and Middle East talks per Financial Times reporting, 23 September 2026; no FT text reproduced. Figures as at 22 September 2026.