Bond market volatility returned in force on Thursday, with a jump in U.S. government yields erasing nearly all of the decline the previous day, when the Treasury Department announced an effort to rein in rising borrowing costs. Anxiety about the war in Iran, the state of the economy and government finances fueled the sell-off.
Oil prices rose to their highest levels in a month on Thursday after President Trump claimed he would level “tremendous economic consequences” on countries that did business with Iran. Without naming countries or details on possible actions, Mr. Trump said on social media on Wednesday suggested he could target countries that buy Iranian oil.
Bond rally fades.
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The yields on U.S. government bonds rose on Thursday, as the effects of the Treasury Department’s latest effort to rein in borrowing costs faded.
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The 10-year Treasury yield, a widely influential interest rate that underpins mortgages, business loans and many other types of debt, rose 0.05 percentage points to 4.7 percent, reversing a similar sized decline in yields on Wednesday, when the Treasury doubled the amount of debt it was authorized to buy back from investors in weekly operations.
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Investors are worried about the war in Iran’s effect on inflation, large government deficits and rampant borrowing to finance artificial intelligence infrastructure, which have all put upward pressure on yields. On Wednesday, America’s gross national debt crossed $40 trillion for the first time.
Oil prices rise.
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The price of Brent crude, the global benchmark for oil, rose about 2.5 percent to more roughly $94 a barrel.
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West Texas Intermediate crude, the U.S. benchmark, rose to around $88 a barrel.
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Investors and analysts are focused on the continued disruption to shipping in the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas that normally carries as much as one-fifth of the world’s oil supply. According to Kpler, a maritime data service, 12 ships crossed the strait on Wednesday, far below the prewar average of about 130. The market is also watching efforts by the Iranian-backed Houthi militia in Yemen to restrict traffic in the Bab al-Mandab Strait at the southern end of the Red Sea, which Saudi Arabia has used as an alternative to the Strait of Hormuz.
Stocks slip on Wall Street.
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The S&P 500 nudged 0.2 percent lower as stocks resumed trading in the United States on Thursday. Walmart posted weak quarterly sales growth, joining other big retailers in warning that consumers are being cautious with their spending.
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In Europe, the Stoxx 600, a broad index that tracks the region’s largest companies, fell 0.3 percent.
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Stocks in Asia were broadly higher, carrying over a U.S. rally from the day before. The KOSPI index in South Korea surged 5.9 percent, while the Nikkei 225 in Japan jumped 1.4 percent.
Gasoline prices tick up.
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Gas prices rose on Thursday, to a national average of $4.10 a gallon, according to the AAA motor club. The increase has raised the cost for drivers by 38 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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The average price of diesel rose five cents, to $5.55 on Thursday, up 48 percent since the start of the war.
The post Bond Market Stress Returns and Oil Rises in Edgy Day for Markets appeared first on New York Times.
