Rising Energy Prices and Treasury Yields Weigh on Equities

Energy prices are climbing again as conflicts in the Middle East show no sign of easing. With inflation pressures building, Treasury yields are rising: the US 30-year yield has moved above 5.40%, reaching its highest level since spring 2002. Higher yields are weighing on equities and Gold.

Canada’s July retail sales fell 0.7%, compared with the Street’s expectation of a 0.8% decline. Yesterday’s US Flash Manufacturing PMI rose to 57.0 versus 53.5 expected, while Flash Services PMI reached 58.7 versus 56.0 expected. Both improved from last month, pointing to a resilient US economy and giving the Fed room to maintain a restrictive stance.

NASDAQ futures are down 0.9% and Dow futures are down 0.3%. In Asia, the Nikkei gained 0.8% while the Hang Seng fell 0.3%. European markets are mixed, with the DAX down 0.2% and the FTSE up 0.2%.

Crude Oil is up 1.6% above $93.50/bbl, and Brent Crude is up 1.9% above $105.00/bbl. Gasoline is steady above $3.55/gallon. Gold is down 0.3% toward $4,300/oz, Copper is up 0.1% near $6.75/lb, and Silver is down 1.3%.

The US 10-year Treasury yield has moved above 5.10%. The US Dollar Index is up 0.2%, while the Euro is down 0.2% and the Loonie is down 0.1%. Costco and BlackBerry report earnings after the close.

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