Bond yields closely track diesel prices now, and Trump's deal with Putin may be too little too late

Key Points:

• The national average price for diesel stands at $6.277 per gallon, down from a recent high but still 71% above last year, driven by refining capacity issues in the Middle East and Russia causing a sharper fuel market crunch than crude oil prices alone would suggest.
• Diesel price surges have broadly impacted manufacturing, agriculture, and logistics, contributing to higher transportation costs and inflation, with diesel prices now influencing bond yields and Federal Reserve rate hike expectations more than crude oil prices.
• In response, President Trump signed an executive order deferring the 24-cent federal diesel tax and announced a deal to import significant quantities of diesel from Russia, despite prior sanctions and geopolitical tensions.
• Experts and industry stakeholders express skepticism about the effectiveness of these measures, noting that the tax deferral is minimal compared to the overall price increase and that Russian diesel imports may simply shift supply without lowering prices.
• Political analysts suggest that even substantial reductions in fuel prices or an end to the Iran war are unlikely to sway undecided voters significantly in upcoming elections, with many voters doubtful about Trump's ability to influence these issues.