Bond Selloff Fades as Oil Cools, Lifting Stocks: Markets Wrap
(Bloomberg) — Bonds steadied after a selloff that drove global yields to the highest in decades as oil’s rally lost steam, helping US stocks to extend gains for the week.
The 10-year Treasury yield slipped two basis points to 5.18%, paring a two-day surge of more than 20 basis points. US and Iran negotiators exploring a phased deal to reopen the Strait of Hormuz sent Brent crude toward $105 a barrel. S&P 500 futures rose 0.3%, while Nasdaq 100 contracts climbed 0.5%. The dollar snapped a five-day run of gains and the yen outperformed major peers.
Fluctuations in oil prices are likely to remain a key driver for markets at a time when elevated energy costs are stoking inflationary pressures and underpinning the outlook for further monetary policy tightening. Swaps fully price three additional Federal Reserve quarter-point hikes over the next year, a prospect that could hold back risk appetite and keep bond yields high for some time.
“We are in a one-factor world over the coming days, with oil prices driving rates and rates driving all asset classes,” wrote Mohit Kumar at Jefferies. “Equity markets have behaved relatively well despite the rise in rates. Optimism over AI and demand for AI infrastructure has helped.”
Europe’s Stoxx 600 headed for its biggest weekly gain since August, fueled by a rebound in economically sensitive sectors. Regional bonds also found some relief after the global selloff.
Longer-dated bond yields continue to reflect fiscal concerns and the likelihood of strong government borrowing, said Francisco Simon at Santander Asset Management. While the prospect of restored crude flows from the Middle East will ease pressure on rates, a run of strong economic data suggests the global economy can withstand tighter financial conditions, he said.
“Market direction will likely be determined by whether easing geopolitical tensions can outweigh the ongoing message from the macro data,” Simon said. “Growth remains resilient, and that is keeping upward pressure on yields despite some relief on the energy front.”
The final reading of a University of Michigan’s survey due later today is likely to show consumer sentiment deteriorated in September due to higher prices at the pump, according to Bloomberg Economics.
“The economic data calendar will be quite dull until the ISM on Thursday and the labor data on Friday next week,” said Roberto Scholtes, head of strategy at Singular Bank. “Everything will continue to revolve around energy prices, bond yields and AI-related news.”
In Japan, the yen headed for its biggest daily gain in more than two weeks after Finance Minister Satsuki Katayama’s latest comments on the currency kept traders on alert for the risk of intervention.
Katayama said US President Donald Trump raised concerns about the currency in talks with Prime Minister Sanae Takaichi in New York earlier this week, easing some of the pressure after a resurgent dollar had driven the currency close to the 160 level.
What Bloomberg Strategists Say:
“Higher yields are not a problem for equities when they come with stronger growth. Stronger growth typically outweighs the valuation drag from a higher discount rate, helping explain why stocks perform well during hiking cycles. That is what has been happening now. Yields are shifting to a higher equilibrium, reflecting stronger potential growth and a higher neutral rate.”
Corporate News:
Microsoft Corp. is merging the consumer and workplace versions of its Copilot AI assistant into one product aimed at corporate customers. The Federal Reserve is exploring raising asset thresholds that trigger stricter regulatory oversight of larger US lenders, Reuters reported, citing four people it didn’t identify. Akamai Technologies Inc. surged more than 20% in premarket trading after inking a $11.6 billion deal with Anthropic PBC for computing power. People Inc. rallied after the Wall Street Journal reported that MGM Resorts International is mulling a bid to purchase the Barry Diller-owned media giant. UniCredit SpA is seeking to benefit from a new round of Italian bank consolidation by pitching itself as a potential buyer of assets that may get divested to address competition concerns. BASF SE has been exploring a potential acquisition of Evonik Industries AG, according to people familiar with the matter. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.3% as of 8:34 a.m. New York time Nasdaq 100 futures rose 0.5% Futures on the Dow Jones Industrial Average rose 0.3% The Stoxx Europe 600 rose 0.6% The MSCI World Index rose 0.3% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.2% to $1.1403 The British pound rose 0.3% to $1.3253 The Japanese yen rose 0.7% to 157.73 per dollar Cryptocurrencies
Bitcoin rose 0.1% to $84,429.07 Ether rose 1% to $2,714.19 Bonds
The yield on 10-year Treasuries declined two basis points to 5.18% Germany’s 10-year yield was little changed at 3.60% Britain’s 10-year yield declined two basis points to 5.36% Commodities
West Texas Intermediate crude fell 2% to $92.70 a barrel Spot gold rose 0.6% to $4,301.26 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling.
©2026 Bloomberg L.P.
