Stocks, Bonds Fall as Oil Rally Fuels Inflation Fears — US Market Wrap
Stocks joined bonds lower as a rally in oil prices fueled concerns about inflationary pressures, reinforced by data showing US business activity expanded at its fastest pace since 2021. The decline in equities pulled the S&P 500 back from near-record levels. Brent crude settled around $103, strengthening bets that the Federal Reserve will continue raising interest rates. The Treasury selloff deepened after a weak $70 billion five-year note auction pushed yields across most maturities to nearly two-decade highs. The dollar advanced against all major currencies. The Fed last week raised rates by 25bps to contain persistent price pressures. Fed Governor Michael Barr said further tightening will likely be needed to return inflation to the 2% target. Money markets are fully pricing in two additional hikes over the next three policy decisions. Traders also monitored the latest geopolitical developments. Iranian President Masoud Pezeshkian said the country will not allow freedom of navigation through the Strait of Hormuz while sanctions and a US blockade remain in place, highlighting the difficulty of reaching a peace agreement despite efforts to revive negotiations. The Trump administrat
Stocks joined bonds lower as a rally in oil prices fueled concerns about inflationary pressures, reinforced by data showing US business activity expanded at its fastest pace since 2021. The decline in equities pulled the S&P 500 back from near-record levels. Brent crude settled around $103, strengthening bets that the Federal Reserve will continue raising interest rates. The Treasury selloff deepened after a weak $70 billion five-year note auction pushed yields across most maturities to nearly two-decade highs.
The dollar advanced against all major currencies. The Fed last week raised rates by 25bps to contain persistent price pressures. Fed Governor Michael Barr said further tightening will likely be needed to return inflation to the 2% target. Money markets are fully pricing in two additional hikes over the next three policy decisions.
Traders also monitored the latest geopolitical developments. Iranian President Masoud Pezeshkian said the country will not allow freedom of navigation through the Strait of Hormuz while sanctions and a US blockade remain in place, highlighting the difficulty of reaching a peace agreement despite efforts to revive negotiations. The Trump administration is working with refiners to voluntarily limit US diesel exports as an alternative to an outright ban on sending the fuel overseas, Energy Secretary Chris Wright said Wednesday.