Global Markets Retreat as Energy Prices and Bond Yields Climb

Stock markets around the world continue to retreat as ongoing attacks against Saudi energy infrastructure sent energy prices higher again today. The renewed rise in energy prices is pushing up inflation and interest rate expectations. The US 10-year Treasury note yield hit 5.00% this morning as the Fed begins its meeting ahead of Wednesday’s interest rate decision and updated FOMC member forecasts.

Chinese economic data was mixed. Retail sales rose 0.4%, missing the Street’s 0.8% estimate, while industrial production increased 5.2%, ahead of the 4.8% consensus forecast. In the US, the Empire State Manufacturing Index came in at 7.6, below the Street’s 14.7 estimate.

NASDAQ futures are down 0.2%, while Dow futures have declined 0.3%.

Overseas, Japan’s Nikkei was steady, while Hong Kong’s Hang Seng fell 1.0%. In Europe, Germany’s DAX is steady, while the UK’s FTSE is down 0.3%.

Energy prices are climbing, with crude oil up 0.9% and trading above $102.00 per barrel. Brent Crude has gained 0.3% and is trading above $106.00 per barrel, while Gasoline is up 1.0% and trading above $3.30 per gallon. Gold is down 0.6% near $4,325 per ounce, Copper is steady near $6.40 per pound, and Silver has declined 0.6%.

In the bond market, the US 10-year Treasury note yield has climbed above 5.00%, while the US 30-year Treasury note yield remains above 5.35%. The US Dollar Index is up 0.2%. The Euro is down 0.1%, the Loonie has slipped 0.2%, and Bitcoin is down 2.8%.

Looking ahead, US retail sales for August are due Wednesday morning. The Fed is widely expected to announce a 0.25% increase in the fed funds rate to 4.00% on Wednesday afternoon.

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