10-Year Treasury Yield Tops 5%, Highest Since 2007, as Oil Holds Near $109 and Houthi Escalation Deepens on FOMC Eve

US stocks fell for a third straight session on the eve of the Fed's rate decision: the Dow lost 328.09 points (-0.63%) to close at 52,093.11, the S&P 500 fell 0.45% to 7,585.73, and the Nasdaq dropped 0.78% to 25,981.57. Energy (+1.9%) and Materials (+0.32%) were the only advancing S&P sectors as Brent crude settled near $109/bbl. The 10-year Treasury yield rose as much as 4 basis points to touch 5.02% intraday — surpassing its 2023 peak and reaching its highest level since July 2007 — as traders priced in roughly 92% odds of a quarter-point hike the next day. The move came alongside a deepening Yemen crisis: Houthi forces, having seized the Red Sea port of Mokha and the islands of Perim and Zuqar the prior weekend, escalated attacks on Saudi territory, displacing nearly 94,000 people, while Trump Middle East adviser Massad Boulos said freedom of navigation in the Red Sea remained a 'red line' for the administration. The combination of a still-closed Strait of Hormuz, Saudi Arabia's East-West pipeline shutdown after the Sept 10-11 drone strikes from Iraqi territory, and the Houthi Red Sea campaign kept a war-risk premium in oil and yields heading into Wednesday's FOMC decision.