“A whole civilization will die tonight.” Or maybe tomorrow night. Sometime before the midterms. Maybe after. It’s hard to say.

Oil was sharply higher on Thursday, when Brent rose above $105 on fresh concerns around a potential escalation in the Mideast, where reports indicate Iran could face the resumption of major US combat operations including a “massive” bombing campaign targeting the country’s energy facilities, nuclear installations and even civilian infrastructure.

“Things will go one of two ways: The easy way or the hard way,” an administration official told Axios, which said the Pentagon issued a directive for CENTCOM to “conclude preparations for resuming” the war.

An Israeli official confirmed that talks between the US and Israel on a new round of coordinated attacks against Iran have taken place. Although the odds of any such attacks occurring prior to either countries’ elections were described by that official as “not high,” the source indicated the chances of a return to war in November have “increase[d] significantly.”

As a quick, but important, aside, Israel goes to the polls on October 27. Revelations that Benjamin Netanyahu was given advanced warning of the October 7, 2023, Hamas attacks by both the UAE and Egypt have jeopardized his already fraught effort to hold onto power. Projections for the composition of the Knesset following the election vary.

The move in crude on Thursday put renewed upward pressure on US yields, effectively negating the good vibes engendered by a warm reception for Scott Bessent’s 10-year reopening midweek.

Note from the figure below that although breakevens are directionally consistent with the ebb and flow of crude prices this year, you really have to tighten the axes to show it.

The scale on the left y-axis spans a whole 30bps. 10-year breakevens were 2.37% on Thursday. They were 2.25% on January 2. Nominal (i.e., “all-in”) 10-year yields are up 110bps this year. So, virtually none of the move is breakevens.

That continues to confound. “There has been a strong correlation between the direction of yields and the movement in energy prices since the war began, there is no questioning this dynamic,” BMO’s Ian Lyngen and Vail Hartman remarked on Thursday morning. “What we find so perplexing is the fact that breakevens have remained so well contained.”

You could chalk that up to the Fed’s credibility under Kevin Warsh but… well, let’s just say not everyone actually thinks he’s credible. If concerns around an energy-driven inflation shock were behind the never-ending bond selloff, “one would expect it to translate into significantly higher forward inflation expectations,” as Lyngen went on to say.

Wednesday’s update on the NY Fed’s consumer survey found households’ inflation expectations moving up to the highest since 2023, but only at the 12-month horizon. The longer-term outlook’s more benign.

Anyway, fire and fury. In what amounted to confirmation of Axios‘s reporting, NBC said Trump’s national security team has indeed “discussed possibly resuming large-scale US military operations in Iran in the coming weeks.” One option would find Pete Hegseth taking another run at the Guards “before the midterm elections.”

During a characteristically silly rally in San Antonio on Wednesday, Trump again suggested the IRGC’s calling him around the clock to forestall new US strikes. “They’re willing to offer us anything to stop,” he said. “I think [a] deal isn’t really something that I want to do.”