The spillover of higher energy prices

Summary

Marketplace Morning Report – “The spillover of higher energy prices”

Date: May 18, 2026
Host: Nancy Marshall-Genzer
Guests: Julia Coronado (Macro Policy Perspectives), Giselle Regatato (Marketplace reporter), Paulo Feldman (Univ. of São Paulo)

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Episode Overview

This episode tackles how rising global energy prices—driven in part by the ongoing Middle East conflict—are beginning to spill over into broader economic indicators such as inflation, interest rates, borrowing costs, and even automotive markets worldwide. The host dives into what these changes mean for everyday consumers and global markets, with a special look at the boom of Chinese electric vehicles (EVs) in Brazil as a response to higher fuel prices.

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Key Discussion Points & Insights

1. Energy Price Spillover Across the Economy

Guest: Julia Coronado, Macro Policy Perspectives
(Segment starts at 00:58)

• Market Reaction: Persistent geopolitical tensions in the Middle East, especially the ongoing war and closed Strait of Hormuz, have prompted a sell-off in global bonds, pushing up yields on 10-year and 30-year Treasuries to 15-month and two-decade highs, respectively.
• Julia Coronado (01:54):

  “We had several inflation readings last week that came in strong and not just energy, but it seems to be already spreading into things like airfares... With no end in sight to the conflict and the Strait of Hormuz still closed, the prospect for even higher energy prices, and even more spillover into other prices, that is on the minds of markets this morning.”

• Immediate Impact on Borrowers: Rising yields mean higher borrowing costs:
  • Mortgage, credit card, and auto loan rates poised to increase.
  • “It could be a summer of pain for the summer driving season and might not be so great for the housing market as well.” (Julia Coronado, 02:38)
• Persistent Inflation Fears:
  • Inflation, initially limited to energy, is now fanning out to broader sectors.
  • Short-term shocks can often be absorbed, but persistent increases could force consumers to “tighten their belts.”
  • “If this is going to last, you’re going to start to see consumers tighten their belts. They just won’t have the cash to look through it anymore.” (Coronado, 03:16)

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2. Shifting Car Markets: Chinese EVs Ascend in Brazil

Reported by Giselle Regatato
(Segment starts at 05:38)

• BYD’s Rapid Growth:
  • Sales of the Chinese EV brand BYD up 70% in Brazil over the past year; more than 37,000 units sold in Q1 2026.
  • EVs now a practical response to high fuel prices for working drivers.
  • Quote from Uber driver Albertini Nacioneto (06:09):

    “I was losing money with a combustion car... It was costing me roughly $500 a month to fill his tank.”

• Cost Structure & Market Strategy:
  • BYD’s vertical integration (making batteries, software, and vehicles) lowers production costs, resulting in highly competitive pricing.
  • Murillo Briganchi, Pride Consulting COO (06:32):

    “BYD invested a lot in marketing and offers very competitive prices.”

  • BYD Dolphin Mini is now Brazil’s top-selling car at $24,000 USD.
• Scale and Expansion:
  • Factory in Bahia, Brazil, now set to produce 600,000 cars per year.
  • Brazil is now BYD’s biggest market outside China.
  • BYD aims to become Brazil’s number one carmaker by 2030.
• Controversy & Labor Issues:
  • Allegations of labor abuses: nearly 500 Chinese workers brought in without paperwork to build the plant, with over 150 “rescued” from what officials called “slavery-like conditions.”
  • BYD declined to comment.
• Government Support:
  • Paulo Feldman, University of São Paulo (08:01):

    “Chinese companies, they get support from the government. Sometimes the support is huge, which is the case here.”

  • The Chinese government is seen as heavily subsidizing BYD’s international growth.
• Competitive Landscape:
  • Other Chinese and international automakers—like GM in partnership with Hyundai—are ramping up offerings in Brazil to respond to the Chinese push.

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Notable Quotes & Memorable Moments

• Spillover Concerns (01:54, Julia Coronado):

  “The prospect for even higher energy prices and even more spillover into other prices, that is on the minds of markets this morning.”

• “A summer of pain” for borrowers (02:38, Julia Coronado):

  “It could be a summer of pain for the summer driving season and might not be so great for the housing market as well.”

• Consumer Resilience, But For How Long? (03:12, Julia Coronado):

  “Consumers are pretty good at least looking through a month or two of higher gas prices. But if this is going to last, you’re going to start to see consumers tighten their belts.”

• Cost of Conventional Cars (06:09, Uber driver Albertini Nacioneto, via Giselle Regatato):

  “I was losing money with a combustion car... It was costing me roughly $500 a month to fill his tank.”

• State Support in EV Expansion (08:01, Paulo Feldman):

  “Chinese companies, they get support from the government. Sometimes the support is huge, which is the case here.”

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Timestamps for Key Segments

| Timestamp | Segment/Event Description | |-----------|-------------------------------------------------------------| | 00:58 | Introduction of energy price spillover story; Julia Coronado joins | | 01:32 | Discussion of bond yields soaring and market jitters | | 02:30 | Impact on borrowing and everyday consumers | | 03:06 | How inflation may become more persistent | | 05:38 | Feature on Chinese EVs (BYD) and Brazil’s shifting car market| | 06:09 | Uber driver firsthand account of cost-driven switch to EVs | | 06:32 | Pride Consulting on marketing, cost advantages of BYD | | 08:01 | Paulo Feldman on government support and Chinese car expansion|

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Overall Tone & Style

The episode balances urgency—reflecting real market anxieties—with practicality and real-world impacts for listeners. As usual for Marketplace, the reporting is concise, fact-driven, and features direct voices from both experts and everyday people.

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Summary

This episode spotlights how geopolitical risk and surging oil prices are quickly bleeding into broader economic woes, raising borrowing costs and fueling longer-lasting inflation concerns in the U.S. and abroad. In Brazil, the secondary ripple is a massive acceleration in EV adoption, with Chinese automaker BYD—heavily government-supported—breaking records, but not without labor controversy. Marketplace delivers a sharp, well-contextualized, and tangible look at today’s interconnected energy, finance, and consumer markets.

Transcript

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[Nancy Marshall-Genzer]

Will higher oil prices trickle through the economy Marketplace? I'm Nancy Marshall Gensler in Washington. The US And Iran remained far apart on a ceasefire, with President Trump taking to social media to warn the clock is ticking. The standoff is rattling global markets. Government bonds are rising, pushing up borrowing costs. And oil prices are moving higher this morning as traders worry the war in the Middle east will lead to a prolonged period of higher infl. For more, we're joined by Julia Coronado. She's founder and president of Macro Policy Perspectives. Hi Julia.

[Julia Coronado]

Good morning.

[Nancy Marshall-Genzer]

So we continue to see a sell off in global bonds this morning, pushing up the yield on the 10 year treasury bond to its highest level in 15 months. The 30 year treasury has now reached a two decade high. What is driving this? Is it geopolitical uncertainty, the war in the Middle east, or some of the sticky inflation we saw last week? All of the above.

[Julia Coronado]

Pretty much all of the above. We had several inflation readings last week that came in strong and not just energy, but it seems to be already spreading into things like airfares. And there's a lot more in the pipeline. So with no end in sight to the conflict and the Strait of Hormuz still closed, the prospect for even higher energy prices and even more spillover into other prices that is on the minds of markets this morning.

[Nancy Marshall-Genzer]

So what does this bond sell off mean for everyday borrowers, you and me, and the interest rates that we pay?

[Julia Coronado]

Well, it means that mortgage rates are going to rise. Rates on credit card borrowing are going to rise. Rates on car loans potentially are also going to rise. So anything that you borrow money for is going to get more expensive in addition to the higher prices you're paying at the pump. So it could be a summer of pain for the summer driving season and, and might not be so great for the housing market as well.

[Nancy Marshall-Genzer]

Yeah, oil prices are up this morning, Julia. So at what point does this kind of energy shock feed into inflation in a more lasting way? Or is that happening already?

[Julia Coronado]

It is starting to happen again. The prospect is that the next few months are gonna bring more, more of the same. You know, consumers are pretty good at least looking through a month or two of higher gas prices. But if this is going to last, you're going to start to see consumers tighten their belts. They just won't have the cash to look through it anymore.

[Nancy Marshall-Genzer]

Julia Coronado, founder and president of Macro Policy Perspectives and a professor at the University of Texas, Austin. Thank you.

[Julia Coronado]

My pleasure.

[Nancy Marshall-Genzer]

President Trump has withdrawn his $10 billion lawsuit against the Internal Revenue Service which alleged the IRS improperly released some of his financial records. This after reports the White House is floating a proposal create a nearly $1.8 billion fund to compensate supporters of the President who feel they were mistreated by previous administrations.

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[Nancy Marshall-Genzer]

cars are popping up more and more on the streets of Brazil, one of the biggest car markets in the world. As gas prices spiked with the war in the Middle east, the Chinese EV maker sold more than 37,000 vehicles in Brazil in the first quarter of this year. That's a 70% jump from the same time last year. Giselle Rigatou explains how Brazil got to be the company's biggest market outside of China.

[Giselle Regatato]

Uber driver Albertini Nacioneto, who lives in the northeast city of Recife, almost gave up his job. I was losing money with a combustion car, he says. It was costing him roughly $500 a month to fill his tank. Inacio spent $30,000 on a BYD Dolphin plus last year. The car is excellent. It's working great is. In four years, BYD has sold almost a quarter million electric and plug in hybrid cars here. Murillo Briganci is chief operating officer of Pride Consulting. BYD is one of their clients. BYD invested a lot in marketing and offers very competitive prices, he says. BYD's Dolphin Mini is now the top selling car in Brazil. It costs $24,000. BYD produces the batteries, the software and the vehicles. That reduces costs, Briganchi says. In 2025, BYD surpassed Tesla to become the world's top EV seller. International expansion is key because BYD is facing stiff competition and lower profits in China. At the opening of BYD's factory in Kamasary, Bahia, last year, Brazil president Luizinas Lula da Silva celebrated that the company will produce 600,000 cars a year here. But Hula's own government conducted an investigation that found that BYD brought almost 500 Chinese workers without proper paperwork to build the plant. More than 150 were rescued in what they described as slavery like conditions. BYD declined to talk to Marketplace for this story. Paulo Feldman is a professor of economics and innovation at the University of so Paulo. He says there is a reason BYD cars are so cheap.

[Paulo Feldman]

Chinese companies, they get support from the government. Sometimes the support is huge, which is the case here, he says.

[Giselle Regatato]

The Chinese government is footing the bill.

[Paulo Feldman]

In my opinion, this is a kind of dumbbell.

[Giselle Regatato]

BYD is already the fifth most popular car brand in Brazil and wants to be number one by 2030. It won't be easy. More Chinese car companies are coming here and automakers are launching new models like American GM in partnership with South Korean Hyundai. In Brazil, I'm Giselle Regatao for Marketplace,

[Nancy Marshall-Genzer]

and in Washington, I'm Nancy Marshall Genzer with the Marketplace Morning Report. From APM American Public Media.

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