Stocks and Bonds Fall as Inflation Concerns Keep Yields Elevated — US Market Wrap
Stocks and bonds declined as falling oil prices failed to ease concerns that still-elevated energy costs could sustain inflation and prompt further Federal Reserve rate hikes. Treasury losses pushed 30-year yields to their highest level since 2002. Around 300 companies in the S&P 500 declined, leaving the index with back-to-back losses. The dollar strengthened, while the euro fell to its weakest level in 16 months. Brent crude dropped below $103 a barrel after the Trump administration ordered another release from emergency oil reserves amid a stalemate in US-Iran negotiations. Bond markets remain under pressure as investors demand greater compensation amid persistent inflation concerns, government spending and increased corporate borrowing to finance artificial-intelligence investment. Money markets continue to price a series of Fed rate increases over the coming year. New York Fed President Williams indicated that one additional rate increase this year may be appropriate to contain inflation, while stressing there is no urgency to move again following this month’s hike. Traders subsequently reduced expectations for another increase at the Fed’s October meeting.
Stocks and bonds declined as falling oil prices failed to ease concerns that still-elevated energy costs could sustain inflation and prompt further Federal Reserve rate hikes. Treasury losses pushed 30-year yields to their highest level since 2002. Around 300 companies in the S&P 500 declined, leaving the index with back-to-back losses. The dollar strengthened, while the euro fell to its weakest level in 16 months.
Brent crude dropped below $103 a barrel after the Trump administration ordered another release from emergency oil reserves amid a stalemate in US-Iran negotiations. Bond markets remain under pressure as investors demand greater compensation amid persistent inflation concerns, government spending and increased corporate borrowing to finance artificial-intelligence investment. Money markets continue to price a series of Fed rate increases over the coming year. New York Fed President Williams indicated that one additional rate increase this year may be appropriate to contain inflation, while stressing there is no urgency to move again following this month’s hike.
Traders subsequently reduced expectations for another increase at the Fed’s October meeting.