Stocks Waver as Oil Rally Triggers Bond Volatility: Markets Wrap
(Bloomberg) — A renewed episode of bond volatility left traders reluctant to make riskier bets, with stocks wavering on worries that elevated oil prices will fuel inflation and force the Federal Reserve to lift rates.
As the selloff in bonds deepened, 30-year yields hit the highest since 2004. The Treasury’s expanded buyback operation failed to live up to expectations. While the S&P 500 was little changed, most of its firms fell. Brent crude settled near $107 after briefly paring its rally on news reports that the US and Iran are exploring a phased deal to reopen the Strait of Hormuz.
Investors are demanding greater compensation to hold bonds as concerns about persistent inflation, government spending and surging corporate borrowing to finance the artificial-intelligence buildout intensify. Against this backdrop, money markets now fully reflect three Fed hikes over the next year.
“We are firmly set up for higher yields in this environment,” said Byron Anderson at Laffer Tengler Investments. “Rate hikes do not solve Iran, oil, the AI boom, or inflation. They do increase borrowing costs for everyone else in the market, which will eventually hit labor and the consumer if the Fed gets aggressive.”
Meantime, President Donald Trump and Chinese leader Xi Jinping addressed their intense competition over AI on Thursday during a summit. Hours earlier, the US announced an agreement to extend its trade truce with China by around two months to Jan. 10.
Traders also parsed comments from central bank officials. Fed Bank of Philadelphia President Anna Paulson joined the chorus of policymakers saying additional hikes may be needed to ensure inflation returns to their goal. Her New York colleague John Williams noted the Fed still has “a lot of work to do” in dealing with price pressures.
Cleveland Fed President Beth Hammack said the economy is facing a series of supply shocks, increasing the potential for an inflationary mindset to take hold. Her Richmond counterpart Tom Barkin noted a broad range of persistent cost pressures has raised the risk that inflation could become entrenched.
“While solid economic growth and healthy corporate fundamentals suggest interest rates are not yet restrictive enough to derail the expansion, the rapid increase in yields and elevated bond market volatility are creating a more meaningful headwind for equities,” said Angelo Kourkafas at Edward Jones.
Any easing of geopolitical tensions that helps relieve pressure on energy prices could go a long way toward stabilizing the bond market, in his view. Until then, Kourkafas believes upward pressure on yields is likely to persist as expectations for additional Fed tightening remain elevated.
“Rising yields and higher oil prices are testing market resilience, but strong economic momentum and broad-based earnings growth continue to serve as powerful sources of support,” he added.
Corporate Highlights:
Anthropic PBC has signed an $11.6 billion, seven-year contract with Akamai Technologies Inc. for computing power, adding to the AI developer’s growing list of data center deals. Meta Platforms Inc. unveiled a palm-sized, dedicated gadget for using Muse, the company’s popular new AI assistant. Oracle Corp. is moving to shield itself from racking up expenses on a massive data center being built in New Mexico, adding a fresh wrinkle to a project beset by opposition and regulatory setbacks. Qualcomm Inc., the largest producer of smartphone processors, renewed its global licensing pact with Apple Inc. starting April 1, signaling that the iPhone maker will remain a customer for now. Paramount Skydance Corp. is looking to wrap up a massive $52 billion debt sale to fund its takeover of Warner Bros. Discovery Inc. within the next week, aligning with its compressed timeline to finalize the buyout before facing onerous penalties. UBS Group AG gained and Morgan Stanley fell after a report that the Swiss lender is weighing options, including potential deals with banks in other jurisdictions, as the Zurich-based bank faces the possibility of stricter capital rules at home. Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 4 p.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average fell 0.3% The MSCI World Index fell 0.2% Currencies
The Bloomberg Dollar Spot Index rose 0.3% The euro was little changed at $1.1377 The British pound fell 0.1% to $1.3221 The Japanese yen fell 0.4% to 158.89 per dollar Cryptocurrencies
Bitcoin rose 0.2% to $84,356.51 Ether rose 0.9% to $2,694.96 Bonds
The yield on 10-year Treasuries advanced eight basis points to 5.20% Germany’s 10-year yield advanced four basis points to 3.60% Britain’s 10-year yield advanced three basis points to 5.38% Commodities
West Texas Intermediate crude rose 3.4% to $95.29 a barrel Spot gold fell 0.4% to $4,272.32 an ounce ©2026 Bloomberg L.P.
