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Oil rises as Middle East tensions intensify, pushing Treasury yields higher
Markets are also bracing for US wholesale inflation data, with August PPI expected to rise 0.3% month on month and 5.3% year on year.
US stock futures were mostly flat on Thursday, September 10, as investors waited for key inflation data that could influence Federal Reserve policy, with Nasdaq-100 futures down 0.4% and futures tied to the Dow up 0.2%. Major indexes were also set for a weaker week after Wednesday’s declines, as rising oil prices and higher bond yields kept risk appetite cautious.
Bond market pressure has been tied to a mix of inflation concerns and geopolitics, with Treasury yields pushed to multi-decade highs. Earlier this week, the US Treasury said it would buy up to $6 billion of outstanding securities maturing in the 10 to 20-year sector, after previously indicating $2 billion, but the larger buyback did not fully meet investor expectations, leaving the 10-year yield at its highest level since November 2023.
The backdrop for rates has been the surge in crude tied to renewed Middle East tensions. Global benchmark Brent rose to as high as $101.94 before paring gains, while West Texas Intermediate was around $97 a barrel in Asian trade, after Iran said it was prepared for a more intense war and following US action against Iranian tankers and attacks that sparked fires at oil facilities in Saudi Arabia.
Participants are now focused on the release of August Producer Price Index, a measure of wholesale inflation, due later in the session. Economists surveyed by Dow Jones expect a 0.3% month on month increase and a 5.3% year on year rise.
Latest closeWTI crude $97.01 ▲4.3%|Brent $102.05 ▲4.2%|Nasdaq Comp. 26,253.34 ▼0.6%