Friday’s Rally Fades as Energy and Yields Climb

Friday’s US equity rally is losing momentum, with NASDAQ futures down 0.8% and Dow futures down 0.6% this morning. Crude Oil is rising again after the US and Iran failed to reach an agreement to reopen the Strait of Hormuz, although talks continue. Rising inflation expectations are pushing Treasury yields to new multi-decade highs and weighing on precious metals and other currencies.

There are no notable economic releases or earnings reports scheduled for today. In Asia, the Nikkei fell 0.7% while the Hang Seng gained 0.5%. European markets are mixed, with the DAX unchanged and the FTSE up 0.4%.

Crude Oil is up 3.2%, back above $95.00/bbl, while Brent Crude has gained 3.0% toward $107.50/bbl. Gasoline is up 0.5% near $3.40/gallon. Gold has fallen 2.9% below $4,200/oz, Silver is down 4.5%, and Copper has declined 1.9% toward $6.60/lb.

The US 10-year Treasury yield has climbed above 5.20%, and the 30-year yield is above 5.50%. The USD Index is steady, while the Euro is down 0.1% and the Loonie is down 0.2%.

Wednesday’s month and quarter end may prompt investor repositioning. The Reserve Bank of Australia is expected to raise its overnight rate by 0.25% to 4.60% at Tuesday’s meeting. Central bank speakers feature early in the week, followed by US Core PCE inflation and ADP payrolls on Wednesday, global Manufacturing PMI reports and Nike earnings on Thursday, and US Nonfarm Payrolls and Factory Orders on Friday.

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