Crude oil surged to the highest in 17 months amid efforts to cut production, pushing up the outlook for global inflation and briefly sending 10-year Treasury yields above 2.5 percent for the first time since October 2014. U.S. stocks were mixed two days before a rate decision.
Oil jumped 4 percent in New York after Saudi Arabia signaled it will cut output by more than previously agreed. Longer-dated securities led declines in government bonds. The rising yields weighed on rate-sensitive shares from REITs to phone companies, dragging equities lower in Europe and the U.S. China’s Shanghai Composite Index sank the most since June amid concern the nation’s property market is in poised to decline.
The oil deal has lit a fire under crude prices, fueling an increase in investors’ expectations for global inflation, and exacerbating a bond rout that had been supercharged by Donald Trump’s victory in last month’s election. The prospect of increased price pressures is filtering through into the market’s outlook for central-bank policy, with traders seeing 100 percent odds of a rate hike at this week’s Federal Reserve meeting, and a two-in-three chance of additional tightening by June, according to Bloomberg calculations based on fed fund futures.
“The spike in oil is behind the further cheapening in global bonds,” said Craig Collins, managing director of rates trading at Bank of Montreal in London. “It’s a foregone conclusion that we’re going to have a 25 basis-point rate hike.”
Commodities
West Texas Intermediate crude gained 3.8 percent as of 10:10 a.m. New York time, climbing to $53.45 a barrel. Brent added 4.1 percent to $56.55. Both are headed for their highest settlement prices since July last year.
The deal between OPEC members and outside nations, including Russia, was agreed at a meeting in Vienna at the weekend. It should usher in the first global petroleum cuts in 15 years and covers about 60 percent of the world’s output.
Copper futures slumped 0.6 percent, erasing a gain of 1.4 percent after data showed LME inventories rose the most since June.
Gold futures slid to a 10-month low as the Fed prepares to raise rates, damping the metal’s appeal as a store of value.
Stocks
The S&P 500 Index rose 0.1 percent to 2,261.14, after rising 3.1 percent last week. The Dow Jones Industrial Average climbed above 19,800 to a fresh record, while the Nasdaq 100 Index slumped 0.4 percent.
The ChiNext index sank 5.5 percent and the Shanghai Composite Index lost 2.5 percent as curbs on insurers’ stock trading and concern about the outlook for the property market spurred selling. Hong Kong’s Hang Seng Index slipped 1.5 percent
The Stoxx Europe 600 Index fell 0.6 percent, following its biggest weekly rally in almost two years. Still, commodity producers and miners gained, with the Stoxx 600 Oil & Gas Index up 2.2 percent
Bonds
Ten-year Treasury yields rose as much as six basis points to 2.53 percent. The U.S. Treasury auctions 10-year notes later Monday, and 30-year bonds Tuesday
Hedge funds and other large speculators raised bearish bets on 10-year Treasuries to the highest in almost two years last week, more than doubling them to a net 228,604 contracts, according to the latest Commodity Futures Trading Commission data
Germany’s yield curve, as measured by the spread between two- and 30-year bonds reached the steepest since 2014, based on closing prices, while a similar gauge for Japan widened for a fifth day
U.K. 10-year yields climbed four basis points to 1.49 percent, while those on similar-maturity bunds also added four basis points, to 0.40 percent
Currencies
Oil-exporting currencies lead gains against the dollar, with the Russian ruble gaining 2.2 percent and the Norwegian krone and Mexican peso advancing 0.9 percent
Turkish lira tumbled for a third day, slumping 0.9 percent after twin bombings in Istanbul on Saturday killed 38 and wounded more than 150 people
The euro gained 0.5 percent to $1.0613, after dropping 1 percent last week
Recent Blue Posts
Limited PvP -> PvE Free Character Transfers
Feedback: Hunter Updates
Dragonflight Season 4 Goes Live This Week
MMO-Champion
Recent Forum Posts
Originally Posted by Raybourne
Reply With Quote
