Good morning, it's Thursday, September 3. The Iran war pushed mortgage rates to a one-year high and gas past $4 a gallon as a global bond selloff rattled markets — and the Fed may raise rates for the first time since the conflict began.

Also in today's issue: IRS cuts cost billions, Immigration court chaos spreads, Shutdown averted before midterms.

PS—Was this forwarded to you? Join The Bluebill here. Or forward this to a friend.

Here's what the Iran war costs you this week: a $400,000 mortgage taken out right now runs $2,578 a month. Gas is $4.12 a gallon — up from $2.98 before the first strikes. And since the conflict began, American households have paid an estimated $447 or more in extra energy costs. That's not a forecast. That's money already gone from your checking account.

On Tuesday, the damage deepened. A global bond selloff pushed the 10-year U.S. Treasury yield — the benchmark that sets the price of borrowing across the entire economy — to 4.81%, a near three-year high. The average 30-year mortgage rate climbed to 6.72%, its highest point in a year. Brent crude, the global oil price, hit $95.53 a barrel. And that leads to a number that should concern every borrower in the country — we'll get there in a moment.

The trigger was Iran's largest retaliatory strike in over a month: at least 59 missiles and drones fired overnight at U.S. positions in Jordan, Bahrain, Kuwait, and Iraq. Iran accused the U.S. of hitting a wedding party in the coastal city of Sirik, killing four people including two children. U.S. Central Command said it is investigating but "never targets civilians." Foreign Policy reported details of the alleged strike, which has drawn international calls for an independent investigation.

Now here's the number. Markets are pricing in a roughly 60% chance the Federal Reserve raises interest rates at its September 15–16 meeting. If it happens, it would be the first hike since the war started. A rate hike wouldn't just affect mortgages. It would raise the cost of credit cards, car loans, home equity lines, and every adjustable-rate mortgage in the country — all at once.

New York Fed President John Williams pushed back on Tuesday, saying a hike is not locked in. But the pressure is building from both sides. The Fed is stuck between two bad options: raise rates to fight war-driven inflation and squeeze households further, or hold steady and risk prices climbing even higher. Either path costs ordinary people money.

Here's what makes this moment different from the early weeks of the conflict. Back then, the economic hit was mostly about oil — a supply shock with a clear cause and, in theory, a clear end. Now the damage is structural. Japan's 10-year bond yield hit 3% for the first time since 1996. UK 30-year bonds reached their highest level since 1998. When bond markets in Tokyo and London are breaking records set in the 1990s, the problem is no longer contained to one region. The war has become a weight on the entire global financial system, and the cost is landing on borrowers from Michigan to Manchester.

President Trump posted that he is "not trying to force Iran to the bargaining table" and urged Iranians to "rise up and fight." That language matters because it signals no near-term off-ramp. As long as the conflict escalates, oil stays expensive, bonds stay volatile, and the Fed stays trapped between fighting inflation and causing a recession.

Watch September 15 closely. If the Fed hikes, it will be the clearest sign yet that the war's economic toll has forced a policy reversal — raising rates to fight inflation while the families paying for it had no say in the conflict that caused it. And if it doesn't hike, the question becomes how long the Fed can hold the line before the bond market forces its hand anyway.

You don't have to read everything — just the right thing. 1440's daily newsletter distills the day's biggest stories from 100+ sources into one quick, 5-minute read. It's the fastest way to stay sharp, sound informed, and actually understand what's happening in the world. Join 4.5 million readers who start their day the smart way.

Join for free today!

IRS audit revenue plunged 35% in fiscal year 2025 — from $10 billion to $6.5 billion — after more than 25,000 IRS employees were laid off or took early retirement under the administration's efficiency push. A Treasury Inspector General report published Tuesday found that audits of business partnerships fell 76%, and audits of people earning over $400,000 dropped 26%. That's $3.5 billion in lost revenue in a single year — far more than the government saved by cutting the jobs. The estimated annual "tax gap" — taxes owed but never collected — now stands at $696 billion, with the top 1% of earners responsible for roughly a third of it. IRS staffing is at its lowest level since the 1950s, and the administration has called for further cuts in 2027 (SJV Sun).

Immigration courts in Miami are now processing more than 100 cases at once under a Trump administration tactic called "mega master" calendar hearings — up from about 36 under the old system. Since the tactic began, in-absentia deportation orders — issued when someone misses a court date — spiked 60% nationally to more than 54,000 in July alone. In Miami, those orders jumped 108% between May and July. The surge comes from record monthly arrests, sped-up court dates that were previously set for 2027, and old low-priority cases pulled back onto the docket. The DOJ says clearing the backlog is a top priority — but immigrants are being ordered deported for hearings they may never have been properly told about, and the tactic is now spreading to courts nationwide.

The House voted 370–48 to pass a continuing resolution — a temporary spending bill — funding the government through December 11. Republicans split 193–19 in favor; Democrats 176–29. It's the earliest CR passage in recent memory and a rare show of agreement in a Congress that has lived through a 43-day full government shutdown and a 76-day shutdown of the Department of Homeland Security alone this term. Federal workers, military members, and government contractors avoid a pay disruption two months before the midterms. Current funding levels for education, housing, and veterans' benefits carry forward while broader budget talks wait until after the elections (ABC News).

That's how much IRS audit revenue dropped in a single year after 25,000+ employees were laid off. The cost-cutting cost the government far more than it saved. The top 1% of earners are responsible for roughly a third of the $696 billion in taxes that go unpaid every year (NPR).

P.S. Should the Fed raise rates during a war? Hit Reply — one word is enough.