On May 6, 2026, the Treasury Borrowing Advisory Committee (TBAC) reported that oil prices have risen nearly 60% since the start of the Iran conflict and almost 80% since the beginning of 2026, pushing the broad commodity index above its 2022 pandemic‑era high. The surge in commodity prices has intensified inflation expectations and forced a hawkish repricing of central‑bank policy, especially in Europe, with 10‑year bond yields in many G10 countries at or above recent highs. U.S. markets have outperformed, with the 10‑year Treasury yield remaining below cycle peaks and equities rising nearly 10% since March. Q1 GDP grew 2.0% QoQ, while the labor market shows a fragile equilibrium. The committee noted that Treasury remains adequately funded for FY26 but a gap is expected in FY27. It also recommended keeping auction sizes unchanged and highlighted limited economic benefit from investing excess Treasury cash in overnight repo.
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