Markets regained a measure of calm in early trading on Friday, with stocks rising slightly and bonds trading flat.
It has been a bruising week, with investors’ fears about the war in Iran, government deficits, the state of the economy and a deluge of A.I. debt coming to a head. This confluence hit the bond market particularly hard, although signs of stress could also be seen in stocks, currencies and commodities.
A surprising midweek move by Treasury Secretary Scott Bessent to ease stress in the bond market has already mostly faded, with yields springing back to where they were before the intervention, near multi-decade highs. Stocks remain on track for a weekly decline. The combination of a fall in the value of the dollar and a jump in the price of gold suggests that investors are anxious about the path of U.S. fiscal policy.
Bonds take a breather.
-
Government bond yields were little changed in early trading on Friday. The yield on the 30-year U.S. Treasury, which has been the focus of investor angst about inflation, deficits and A.I.-related borrowing, was flat at 5.24 percent.
-
The 10-year Treasury yield, a vital benchmark for mortgages, business loans and other types of debt, traded at just under 4.7 percent.
-
After U.S. government bond yields hit multi-decade highs earlier this week, Mr. Bessent calmed the market by doubling the amount of debt the Treasury Department is permitted to buy back from investors. The effect of the move didn’t last long: Yields are now largely back to where they were before the intervention.
Stocks push higher.
-
Futures on the S&P 500 pointed to a rise when stocks resume trading in the United States on Friday. But after several choppy trading sessions the benchmark index is on track for a weekly decline, after posting increases in the previous three weeks.
-
In Europe, the Stoxx 600, a broad-index that tracks the region’s largest companies, was flat.
-
Stocks in Asia mostly rose. The Hang Seng Index in Hong Kong rose 1.2 percent. The Nikkei 225 in Japan dipped 0.3 percent.
Oil prices waver.
-
The price of Brent crude, the global benchmark for oil, fluctuated between small gains and losses, hovering around $94 a barrel. The cost of crude has risen nearly 30 percent since the start of the war. This week, President Trump promised an “economic D-Day” against Iran, suggesting dim prospects for an end to the conflict.
-
West Texas Intermediate crude, the U.S. benchmark, traded at about $87 a barrel.
-
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. Over the last month, the Iranian-backed Houthi militia in Yemen have restricted 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.
-
On Thursday, 10 ships navigated the Strait of Hormuz and 32 vessels moved through the Bab al-Mandab Strait, according to Kpler, a maritime data firm. Traffic through both waterways was slightly lower than the most recent five-day average. Passages through the Strait of Hormuz continue to run at a small fraction of prewar levels.
Gasoline prices continue to climb.
-
Gas prices rose again on Friday, up slightly to a national average of $4.11 a gallon, according to the AAA motor club. The price at the pump has risen by 38 percent since the war began.
-
Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
-
The average price of diesel increased to $5.58 per gallon on Friday, up 48 percent since the start of the war.
What they’re saying: Is the “debasement trade” back?
-
“The debasement trade is powered by the fear that fiscal policy across many advanced economies is out of control,” Robin J. Brooks wrote on Substack on Friday. “Markets fear that governments will be tempted to inflate away unsustainable debt burdens.” He is a senior fellow at the Brookings Institution.
-
The so-called debasement trade describes a rush to safe assets by investors who are concerned, in part, about the prospect of higher inflation. Gold, a haven during times of turmoil, is on track for a weekly gain of about 5 percent. Silver is set for an even bigger weekly gain of more than 7 percent.
The post Stocks and Bonds Steady at the End of a Tumultuous Week appeared first on New York Times.
