Treasuries Fall as Oil Rally Fuels Inflation Worry: Markets Wrap
(Bloomberg) — A renewed rally in oil drove bonds lower as stocks wavered ahead of the Federal Reserve decision amid mounting concern that elevated energy prices will curb the potential for interest-rate cuts this year.
Caution prevailed on Wall Street as a US-Iran standoff over the Strait of Hormuz dragged on, lifting Brent crude to around $117. Benchmark 10-year yields climbed to the highest in a month, hovering near 4.4%. While most shares in the S&P 500 retreated, tech companies bounced ahead of results from giants Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp.
“If AI spending is increased and the Fed sees energy costs as transitory, expect a rally. If we hear caution, we could see some interesting downside volatility,” said veteran strategist Louis Navellier.
The US signaled it would stick with a naval blockade of Iranian ports as it tries to force Tehran back to the negotiating table. The blockade lies at the heart of the impasse, with the Islamic Republic insisting it won’t restart negotiations or reopen the Strait of Hormuz as long as the naval restrictions stay in place.
Defense Secretary Pete Hegseth said the US will help allies that step up on defense and punish partners that fail to do so, striking a combative tone as he appeared before Congress on Wednesday.
A jump in energy prices and disruption to supply chains stemming from the war have raised the possibility of stronger inflation and weaker economic growth, with policymakers likely signaling they’re comfortable in wait-and-see mode. Officials will release their statement at 2 p.m. in Washington, with Jerome Powell’s press conference to follow 30 minutes later.
“Elevated oil prices, trading above $110 per barrel, are adding to inflationary pressures, lifting Treasury yields and complicating the policy backdrop,” said Fiona Cincotta at City Index. “This creates a challenging environment for the Fed, requiring a balance between inflation risks and growth concerns.”
“Equity markets paused following a run to record highs, as surging oil prices outweighed strong earnings results,” said Mark Hackett at Nationwide. “Momentum has begun to fade as the tremendous tailwind from the herd collectively moving to the sidelines lightens, with relative weakness seen in many of the recent leaders.”
More likely, the market is entering a phase of consolidation rather than directional move, where earnings reports act as stock-specific catalyst and heightened volatility challenges conviction, he added.
With key tech bellwethers set to report results and no firm resolution on Iran, it’s likely thats stocks are looking for news to justify the consolidation of gains before another leg higher, according to Chris Senyek at Wolfe Research.
Corporate Highlights:
Seagate Technology Holdings Plc gave a fourth-quarter forecast that was much stronger than expected. It also reported third-quarter results that beat expectations. Robinhood Markets Inc. reported net revenue for the first quarter that missed the average analyst estimate. Avis Budget Group Inc. reported a worse-than-expected quarterly loss the morning after a major investor revealed it sold a portion of its stake, sending shares on a roller coaster ride to start the day’s trading. Visa Inc. climbed as the company posted what analysts called “one of the cleanest” quarters in years. Starbucks Corp. reported better-than-expected results and said it now sees comparable sales rising at least 5% this year, up from its previous view of 3% or more. Booking Holdings Inc. cut its outlook for the full year as travel demand suffers from the conflict in the Middle East. Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 10:42 a.m. New York time The Nasdaq 100 rose 0.5% The Dow Jones Industrial Average fell 0.4% The Stoxx Europe 600 fell 0.5% The MSCI World Index fell 0.1% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1692 The British pound fell 0.2% to $1.3490 The Japanese yen fell 0.3% to 160.14 per dollar Cryptocurrencies
Bitcoin rose 0.2% to $76,639.88 Ether rose 0.3% to $2,301.25 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.39% Germany’s 10-year yield advanced two basis points to 3.09% Britain’s 10-year yield advanced four basis points to 5.05% Commodities
West Texas Intermediate crude rose 5.2% to $105.10 a barrel Spot gold fell 1.3% to $4,538.65 an ounce ©2026 Bloomberg L.P.
