Market Summary
Asian Stocks and Bonds Slide as Oil Prices Surge: Asian stocks and government bond prices fell overnight as a sharp rise in oil prices intensified inflation concerns and put pressure on global risk assets. Brent crude traded at around $105.36 a barrel this morning after briefly approaching $110, while investors awaited today’s US CPI report for clues about whether higher energy costs are feeding into broader inflation and strengthening the case for a Federal Reserve rate hike next week.
Fed Rate-Hike Bets Rise to 70% Ahead of US CPI: Markets are now pricing in roughly a 70% probability of a 25-basis-point Federal Reserve rate hike next week, with a move by October fully priced in. Yesterday’s producer price data showed renewed inflationary pressure from higher energy costs, increasing the importance of today’s CPI report. Investors will be watching closely for signs that the oil shock is broadening into underlying price pressures.
Global Bonds Under Pressure as Yields Approach 5%: Asian government bonds followed Treasuries lower after the US 10-year yield surged by 12 basis points during Thursday’s US session, briefly approaching the 5% threshold. Australia’s three-year yield jumped by as much as 20 basis points to 5.05%, its highest level since 2011, while New Zealand’s two-year yield climbed by 25 basis points. The US 10-year yield subsequently eased by around one basis point to 4.95% on Friday.
ECB Raises Rates by 25 bps as Expected: The European Central Bank raised interest rates by 25 basis points, as widely anticipated. ECB President Christine Lagarde added to concerns about tighter global monetary policy, warning that regional inflation could remain well above target into 2027. The combination of persistent European inflation and higher global energy prices reinforces expectations for a more restrictive monetary policy environment.
Oracle Lifts Tech Sentiment: Oracle shares gained in extended trading after the company reported faster-than-expected growth in its cloud computing business. The results provided a positive catalyst for technology stocks, with Nasdaq futures up 0.34% and S&P 500 futures rising 0.35% this morning.
Economic Calendar
- US CPI
- University of Michigan Sentiment Data
- Russia CPI
- Russia GDP
Key Market Moves Today
- S&P 500 Futures: +0.35% (7,626.0)
- US 10-Year Yield: -0.59 bps (4.96%)
- Brent Crude: -1.58% ($105.36)
- Spot Gold: +0.36% ($4,329)
**For professional investors only** Any opinions, news, research, analyses, prices, or other information contained in this blog is provided as general market commentary and does not constitute (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Some of this information may have been provided by third-party sources and, although believed to be reliable, it has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation or warranty, expressed or implied, is made or given by or on behalf of iSAM Securities or its directors or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this blog, and no responsibility or liability is accepted for any such information. As a result, any person acting on any information does so entirely at their own risk. iSAM Securities will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
