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 to keep US stocks on track for a weekly gain.
The 10-year Treasury yield slipped four basis points to 5.16%, 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 lower toward $105 a barrel. S&P 500 futures ticked modestly higher. The dollar snapped a five-day run of gains, while gold rose 0.4% toward $4,300 an ounce.
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.”
In Japan, the yen headed for its biggest daily gain in two weeks after Finance Minister Satsuki Katayama’s latest comments on the currency kept traders on alert for the risk of intervention.
The yen climbed as much as 0.6% to 157.95 against the dollar, leading gains among Group-of-10 peers. 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.
In Europe, the Stoxx 600 is heading for its biggest weekly gain since August, fueled by a rebound in banking and mining shares. Regional bonds also found some relief after the global selloff, with UK gilts outperforming.
Corporate Highlights:
Anthropic PBC has signed an $11.6 billion, seven-year contract with Akamai Technologies Inc. for computing power. Elon Musk said Colossus 2, an AI computing cluster built by his xAI business, may more than double its current Nvidia Corp. chip count by the end of the year. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.8% as of 9:42 a.m. London time S&P 500 futures rose 0.2% Nasdaq 100 futures rose 0.5% Futures on the Dow Jones Industrial Average rose 0.2% The MSCI Asia Pacific Index rose 0.6% The MSCI Emerging Markets Index rose 0.1% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1389 The Japanese yen rose 0.4% to 158.26 per dollar The offshore yuan fell 0.1% to 6.7229 per dollar The British pound rose 0.1% to $1.3235 Cryptocurrencies
Bitcoin was little changed at $84,323.51 Ether was little changed at $2,686.78 Bonds
The yield on 10-year Treasuries declined four basis points to 5.16% Germany’s 10-year yield was little changed at 3.59% Britain’s 10-year yield declined four basis points to 5.35% Commodities
Brent crude fell 1% to $105.54 a barrel Spot gold rose 0.3% to $4,288.67 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling.
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