Jim Cramer’s 3-part bull case ran into a 5% Treasury

Every market forecast is a chain, and a chain is only as strong as its first link.

For most of the summer, investors leaned on one chain in particular. Cheaper oil would bring cheaper money, and cheaper money would lift stocks.

That looked like a fair bet in August, when Brent crude sat in the $80s and the Federal Reserve had not raised rates since 2023.

Then Saudi Arabia shut its East-West pipeline on Sept. 11 after drone attacks, and oil pushed back above $100 a barrel.

On Sept. 15, the 10-year Treasury yield finished at 5%, its highest close since 2007. The next afternoon, the Fed raised rates for the first time since 2023.

Your mortgage quote felt both moves before your portfolio did.

If that sequence sounds familiar, it is because one of Wall Street’s loudest voices had spelled out the hopeful version in nine words, a day before the bond market broke it.

That voice belonged to Jim Cramer, the CNBC host who co-founded TheStreet in 1996 and has had no role at the site since 2021.

The 10-year Treasury hit 5% on Sept. 15, and the Fed hiked a day later.

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Jim Cramer posted his oil and rates bull case in nine words

The chain read “oil goes down, rates go lower, market goes higher,” Cramer wrote in a post on X on Sept. 14 at 2:50 p.m. ET.

Each step depends on the one before it.

More Treasury:

When I lined up that post against the bond and oil tape, the order mattered more than any single price. Step one was the step the market had just taken away.

Cramer warned oil and a hawkish Fed made an unholy mix

Two weeks earlier, Cramer was blunter. He could not see rates falling with “Warsh as a serious practitioner” and “oil stocks headed back up quickly,” he wrote in a post on X on Sept. 1.

He called the combination “Unholy developments.” Brent futures were trading near $92 when the post went up, Benzinga reported.

Kevin Warsh replaced Jerome Powell as Fed chair in May. At Jackson Hole in late August, he pledged “We have work to do” on inflation, as TheStreet reported at the time.

A hawkish chair and rising crude point the same way, and it is the wrong way for anyone waiting on cheaper money.

Cramer kept oil at the front of the line even on Sept. 15. He warned that “if oil goes down big,” anyone forecasting a string of hikes would regret it, CNBC reported.

The 10-year Treasury yield hit 5% before the Fed raised rates

The 10-year yield sat at 5.00% on Sept. 15 after a fifth straight session of gains, Trading Economics data showed. The two-year was at 4.68% and the 30-year at 5.37%.

That is a rise of 0.28 percentage point in a month and 0.97 point in a year. Brent traded at $107.90 the same day, according to TheStreet’s Sept. 15 market coverage.

The Fed moved the next afternoon. Policymakers voted 12-0 on Sept. 16 to raise the federal funds target range by a quarter point to 3.75% to 4%, the Federal Reserve said.

The central bank said the hike “will support a timelier return” to its 2% inflation goal. The median official now expects one more increase this year, Yahoo Finance reported.

Here is where the numbers that reach your wallet stood after the decision:

Federal funds target: 3.75% to 4% after the Sept. 16 hike, per the Federal Reserve.
10-year Treasury: 5.00% on Sept. 15, per Trading Economics, and about 4.95% after the decision, per CNBC.
Brent crude: settled at $105.83 on Sept. 16, down 2.7%, per CNBC.
30-year fixed mortgage: 6.76% in the week ended Sept. 10, against 6.35% a year earlier, per Freddie Mac.
Savings: 0.63% national average yield against about 4% at top online banks, per Bankrate.

Why the 10-year Treasury sets your mortgage payment

The Fed sets overnight borrowing costs. The 30-year mortgage tracks the 10-year Treasury, which is why a 5% benchmark shows up in your quote before any Fed vote does.

The 30-year fixed averaged 6.76% in the week ended Sept. 10, up from 6.71% a week earlier and 6.35% a year ago, Freddie Mac reported. The 15-year averaged 6.09%, against 5.50% a year ago.

I ran the amortization on a $400,000 loan. Moving from 6.35% to 6.76% adds $108.11 to the monthly payment, or $1,297.31 a year.

Over a full 30-year term, that 41-basis-point gap adds $38,919.24 in interest.

Oil feeds the same loop from the other side. Fuel costs push inflation up, inflation keeps the Fed hawkish, and a hawkish Fed keeps long-term yields elevated, a cycle TheStreet traced through mortgage pricing in July.

Stock market investors still see support despite higher rates

Stocks wobbled on Sept. 15 without anything resembling panic, Reuters reported.

“Stocks have not lost their key pillar of support, which is fast-rising earnings,” Angelo Kourkafas of Edward Jones said in that report.

The Fed-day session even offered a short preview of Cramer’s chain. Brent fell 2.7% after Energy Secretary Chris Wright said the pipeline outage “will be measured in days,” CNBC reported.

After the decision, the 10-year yield slipped to about 4.95% and the S&P 500 traded up 0.4%, CNBC’s live coverage showed.

One session is thin evidence. Independent analysts warned the pipeline could stay down for weeks, according to the same CNBC report.

Rising yields have rattled markets through several hiking cycles without derailing long-run stock returns, a point TheStreet made about how investors misread climbing yields.

What a Fed rate hike and 5% yields mean for your money

Move idle cash first. A 0.63% national average against roughly 4% at top online banks is a gap of about $337 a year on $10,000, based on Bankrate figures.

If you are shopping for a house, get quotes from more than one lender in the same week. Freddie Mac chief economist Sam Khater has said shopping around can save borrowers thousands.

Check what your bond funds hold. Long-duration funds take the biggest hit when the 30-year runs to 5.37%, and many target-date funds carry more of them than savers expect.

Price out your variable-rate debt. Credit card APRs and home equity lines reset off the prime rate, which banks typically set three percentage points above the top of the Fed’s range.

With that ceiling now at 4%, a balance transfer or a fixed-rate consolidation is worth pricing before your next statement.

What to watch next for oil prices and mortgage rates

Brent is the first number to watch. Cramer’s chain restarts only if crude gives back its war premium, and Saudi Aramco has not published a restart date for the pipeline.

Freddie Mac’s next mortgage survey lands Sept. 17, and the Fed meets again Oct. 27-28.

Until oil breaks lower and stays there, plan your borrowing around a 5% benchmark rather than a rate cut that now looks further away.