Good morning, it's Tuesday, Sept. 29. The war with Iran is now showing up in something most families never expected it to touch: the cost of a home loan.

Also in today's issue: A judge's check on FEMA, Tariff cuts for toys, OpenAI shelves a model, A $15B Iowa steel bet.

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If you've been waiting for mortgage rates to fall before buying a home, Monday was a hard day to watch the markets. The 10-year Treasury yield climbed to about 5.25%, its highest level since 2007, according to Yahoo Finance. That sounds far from your kitchen table. It isn't, and we'll come back to why.

Mortgage rates are now around 7.5%. Earlier this year, the average 30-year rate dipped as low as 5.99%, based on Mortgage News Daily's index. On a $400,000 loan, that gap adds roughly $400 a month to the payment. That's nearly $4,800 a year for the same house.

Homeowners with fixed-rate loans won't see a change. Buyers, people hoping to refinance and anyone carrying a credit card balance will.

So why does one bond yield matter so much? The 10-year Treasury yield is the interest rate the federal government pays to borrow for ten years. Lenders use it as a starting point for mortgages and car loans. When investors demand more to lend to Washington, nearly everyone else pays more to borrow, too.

Now look, Monday's jump followed another swing in oil prices after President Trump rejected Iran's offer over the weekend to reopen the Strait of Hormuz, a key route for the world's oil. Brent crude, the global benchmark, sat near $98 a barrel Monday, up from about $72 before the war began in late February. Gas now averages about $4.48 a gallon, up from $3.13 a year ago, according to AAA.

Higher fuel costs feed inflation, and inflation pushes investors to expect higher interest rates. Washington's large debt load adds pressure. The Federal Reserve raised its key rate on Sept. 16, its first increase since 2023, and signaled another may come this year.

Here's the counterintuitive part. The Fed sets short-term rates. It does not control the 10-year yield, which investors set by buying and selling government bonds every day. That's why a war thousands of miles away can reach a home loan in Ohio faster than any Fed decision.

The administration argues that steady pressure on Iran, through sanctions and a naval blockade, is the only way to get a lasting agreement on Iran's nuclear program. A U.S. official told CBS News that sanctions relief is possible if Iran makes real nuclear progress. Iran says it won't change its terms. Sen. John Kennedy, a Louisiana Republican, said Sunday the strait has to be opened, through a settlement or by escalating.

The midterms are five weeks away, and the cost of living remains a top concern for voters. Every week the strait stays mostly closed, the cost shows up in gas tanks, grocery bills and, now, mortgage quotes.

What to watch: Iran's foreign minister said he expects a formal U.S. answer to Tehran's proposal on Tuesday. Progress could cool oil prices and ease rates. If they stall, the next tests are new economic data this week and the Fed's next meeting, where another hike would signal higher borrowing costs for longer.

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A federal judge on Monday blocked the Federal Emergency Management Agency, known as FEMA, from withholding 20% of counterterrorism grants from local governments that refused to change how they run elections. The conditions included checking voters against a federal citizenship database and switching to hand-marked paper ballots, all at local expense. Judge Amir Ali, a Biden appointee, ruled that Congress never gave FEMA that power. Local governments in Texas, Tennessee and Ohio had sued. The grants usually total $1 billion to $2 billion a year. The administration says the changes would protect elections from foreign interference and cyberattacks. With the Supreme Court reviving that same database days ago, the fight over who writes election rules isn't settled. Read the judge's 24-page ruling here.

The U.S. and China agreed to cut tariffs on $60 billion in trade, $30 billion in each direction, the White House announced late Sunday. U.S. cuts would cover 77 categories of Chinese goods, including toys, car seats and holiday decorations. China would lower duties on American corn, wheat, meat, seafood and medical devices. Soybeans, the largest U.S. farm export to China, were left off, a letdown for farmers hit by years of trade war. No start date has been set, and the overall tariff of about 30% on Chinese imports stays in place under a truce that runs to Jan. 10. It's a modest step, arriving weeks before holiday shopping. See the full product lists from the White House.

OpenAI, the maker of ChatGPT, said Monday it will not release GPT-6.1 Astra, its next major AI model. Internal testing found the model didn't reliably stay within the tasks users approved and didn't always report accurately what it had done. OpenAI has already disclosed that its AI agents accessed government websites and posted 53 users' images online without permission. President Trump, who has dismissed warnings about AI dangers, meets AI leaders and House Speaker Mike Johnson at the White House on Tuesday. Johnson said Monday the country doesn't need a pause on AI development. Supporters of letting companies police themselves can point to this choice; critics can ask what happens when a company chooses differently. ABC News has the list of expected attendees.

President Trump on Monday announced that Mesabi Metallics will build a $15 billion steel mill in southeastern Iowa. The White House calls it the largest steel plant investment in U.S. history, with 1,750 permanent jobs, up to 6,000 construction jobs and first steel in 2030. Trump credits his 50% tariffs on imported steel. For southeast Iowa, those are life-changing numbers, if they arrive. Big plant announcements often take years to build and can shrink along the way; the company's Minnesota iron ore mine took roughly two decades to open. Iowa also has competitive races for the House, Senate and governor in five weeks, and state lawmakers may need to return to approve tax breaks for the project.

That was the 10-year Treasury yield on Monday, its highest since 2007, according to Yahoo Finance. Lenders use it as the starting point for home and car loans. When it rises, mortgage rates follow, and they're now around 7.5%.

P.S. Should Trump take Iran's offer to reopen the strait? Hit Reply — one word is enough.