US Stocks Fall as Yields Climb on Rate Hike Bets: Markets Wrap
(Bloomberg) — Stocks kicked off September on a weak note, with rising oil prices helping to push global bond yields higher and adding to bets that central banks will raise interest rates this month.
Nasdaq 100 futures fell 1% as stocks linked to the global buildout of artificial intelligence lost ground. S&P 500 contracts slipped 0.6%. Ten-year Japanese yields hit the highest level this century as US Treasury Secretary Scott Bessent pressed the Bank of Japan to tighten policy amid fresh weakness in the yen.
Treasuries fell across the curve, with the 10-year rate touching its highest since January 2025. Thirty-year yields extended their stint above 5%, already the longest since 2006. UK gilts sharply underperformed in Europe. The dollar outperformed most major currencies, while gold headed for a two-week low.
Continued disruptions to energy flows through the Strait of Hormuz sent Brent crude above $92. In the latest escalation in the Middle East, two oil supertankers were struck by unknown projectiles in quick succession while transiting the waterway, according to maritime security consultants Marisks.
Investors are demanding ever greater compensation to hold bonds as concerns about government spending, persistent inflation and surging corporate borrowing to finance the AI buildout intensify. Extending a shift in US rate expectations, traders now price a September hike at around 70%.
Equity investors “should be much more worried about rising long-term bond yields, particularly in the US,” said Joachim Klement, a strategist at Panmure Liberum. “Continued inflation pressures and the more hawkish stance of Kevin Warsh in Jackson Hole last week all point to continued increases.”
The risk-off start to September doesn’t bode well for what is historically the toughest month for the S&P 500. The index has lost 0.8% on average in September over the past three decades, according to data compiled by Bloomberg.
Tuesday’s weakness extended to Europe, where declines in mining stocks as well as travel and leisure shares put the Stoxx 600 on course for its worst day since July. Euro-area inflation quickened to the highest level in almost three years, cementing the case for an interest-rate hike next week.
What Bloomberg Strategists Say:
“Eventually, higher yields will squeeze growth enough for markets to price cuts again. For now, resilient activity keeps the focus firmly on inflation.”
Corporate News:
Shein Global Holdings Ltd. shares pared steep early losses to finish almost unchanged in their Hong Kong debut after a years-long process to an initial public offering. Veritas Capital agreed to buy Bodycote Plc for around £1.65 billion ($2.2 billion), after raising its bid to trump CVC Advisers Ltd. Anthropic PBC agreed to a $35 billion computing deal with Lambda, a cloud provider backed by Nvidia Corp., part of an effort to quickly expand its AI capacity, according to a person familiar with the matter. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.7% as of 10:52 a.m. London time S&P 500 futures fell 0.6% Nasdaq 100 futures fell 1% Futures on the Dow Jones Industrial Average fell 0.7% The MSCI Asia Pacific Index rose 0.2% The MSCI Emerging Markets Index rose 0.2% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.2% to $1.1597 The Japanese yen fell 0.2% to 160.01 per dollar The offshore yuan was little changed at 6.7241 per dollar The British pound was little changed at $1.3543 Cryptocurrencies
Bitcoin fell 1.1% to $77,953.23 Ether fell 0.8% to $2,453.21 Bonds
The yield on 10-year Treasuries advanced four basis points to 4.79% Germany’s 10-year yield advanced four basis points to 3.36% Britain’s 10-year yield advanced 18 basis points to 5.25% Commodities
Brent crude rose 2% to $92.26 a barrel Spot gold fell 1.5% to $4,369.98 an ounce This story was produced with the assistance of Bloomberg Automation.
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