Focus · Capitals Wire
BNN Bloomberg is Canada’s definitive source for business news dedicated exclusively to helping Canadians invest and build their businesses. U.S. futures are edging lower as oil prices resume their climb and high bond yields continue to pressure stocks. Futures for the S&P 500 dipped 0.1 per cent on Wednesday.
Dow Jones futures declined 0.2 per cent and Nasdaq futures dropped 0.3 per cent. Oil prices are now hovering between US$90 and $100 per barrel as the U.S. war with Iran drags on, contributing to stubborn inflation. That has meant investors are asking more when they buy U.S. debt, pushing down the price for Treasurys while pushing their yields to their highest levels in 24 years.
S&P 500 market updates here Benchmark U.S. crude gained 1.2 per cent to $90.42 a barrel. Brent crude, the international standard, rose 1.4 per cent to $97.49 a barrel. Both cost about $30 more per barrel than they did at this point last year.
The 10-year Treasury eased back to 5.24 per cent after briefly topping 5.27 per cent Monday. Those are close to levels last seen in 2007, before the financial crisis and Great Recession sent yields toward zero. The 30-year Treasury yield fell to 5.57 per cent on Wednesday, a level not paid out to investors since 2004.
Treasury yields have been rising for a range of reasons, from worries about inflation to Washington’s massive debt load to signs that the U.S. economy remains solid despite its many challenges. That pressures the economy because higher yields make borrowing money more expensive for everyone, while also undercutting prices for stocks and other investments. There will be another look at inflation and economic growth Wednesday when the U.S. release data on consumer spending for August, and the third estimate for economic growth in the second quarter.
In July, the U.S. Federal Reserve’s preferred measurement for inflation, the personal consumption expenditures price index, rose 3.7 per cent from a year ago, the same as in June. U.S. inflation rates have remained stubbornly above three per cent most of the year, well above the Fed’s target rate of two per cent.
Wall Street expects the central bank to raise its benchmark interest rate again at its next meeting in October. “While it is easy to focus on the macroeconomic headwinds of bond yields and oil, the underlying U.S. economy remains remarkably resilient,” said Tina Teng, market analyst at Moomoo, a global financial technology and online brokerage company. Shares of Boeing rose more than two per cent before the market open Wednesday as the company said that it received a multi-billion dollar contract from the U.S.
Navy for its F/A-XX fighter jets. In Europe, France’s CAC 40 fell 0.6 per cent to 7,988.68, while the German DAX declined 0.3 per cent to 25,316.62. Britain’s FTSE 100 rose 0.1 per cent to 10,644.65.
Asian markets were mostly higher. In currency trading, the U.S. dollar declined to 157.06 Japanese yen from 157.27 yen. The euro cost $1.1357, up from $1.1347.
By Yuri Kageyama and Michelle Chapman
Source: BNN Bloomberg
