Global markets are rising as investors feel some relief from the pause in the recent bond selloff, but they’re still watching oil prices, inflation, and tensions in the Middle East closely. European stock futures rose Thursday, following gains across Asian markets. U.S. Treasury yields eased from their overnight highs, and the dollar weakened. Oil futures were mixed, while gold rose.
Attention centres on US interest rates. Comments from New York Fed President John Williams eased worries about a sudden rate hike. Williams said he doesn’t see clear evidence for the Federal Reserve to raise rates just yet, even with inflation. After his remarks, traders moved back their expectations for rate increases this year to 37.8 basis points, down from 40 earlier in the week.
Bonds, Rates, and the Dollar
Bond markets remain in focus. Treasury yields cooled a bit overnight, but they’re still elevated. Chip Hughey from Truist said volatility is the new normal for bonds because of global tensions and less guidance from the Federal Reserve.
The latest drop in yields was partly due to investors briefly moving to safer assets. Hughey thinks yields will keep falling with oil prices once the Strait of Hormuz gets back to normal. Yields also affected the dollar. As U.S. yields dropped, dollar-denominated fixed-income assets looked less appealing, so the dollar weakened.
Traders are waiting for more signals from the Federal Reserve. Attention is moving towards Fed Governor Waller, who is supposed to speak on Thursday, while U.S. non-farm payrolls due later this week could influence expectations for the Fed’s September meeting.
Oil, Iran, and Inflation Risks
Oil is still one of the biggest sources of uncertainty. Crude futures were mixed after three days of gains. Prices stayed supported by concerns that US-Iran strikes could escalate and disrupt oil flows from the Middle East.
Data on U.S. oil inventories also gave the market a push. The EIA said commercial crude stocks (excluding the Strategic Petroleum Reserve) fell by 4.5 million barrels in the week ending August 28. Analysts expected only a 300,000-barrel drop.
Any prolonged trouble near the Strait of Hormuz could push oil prices even higher, adding to inflation worries and complicating the Federal Reserve’s next moves.
Washington is also putting economic pressure on Iran. The Trump Administration recently rolled out an “Economic D-Day”, aiming to force Tehran to reopen the Strait and return to negotiations. But past sanctions against Cuba, North Korea, Venezuela, Syria show that pressuring authoritarian regimes can take years to see results.
Gold, Copper, and Iron Ore
Gold prices increased, as investors weighed rate expectations and global risks. Konstantinis Chrysikos of Kudo.com noted that this week’s payrolls report might influence the Fed’s September decision. If the employment data disappoints, gold’s downside risk fades; strong data or hawkish Fed comments could push gold lower. Tensions in the Middle East and elevated oil prices remain risks for gold.
Copper rose too, because of worries about supply. In July, Chile’s copper production dropped 9.4% year-on-year, hit by bad weather and maintenance at mines. Low inventories are helping support prices, but the high cost has buyers cautious ahead of September’s usual peak season.
Iron ore was steady. Baocheng Futures pointed out that slow demand is weighing on prices, but rising ocean freight and pre-holiday restocking are preventing sharper drops.
Technology and Business Developments
Major developments are happening in tech and transport, too. Uber and British startup Wayve are bringing robotaxis to London. Cars with Wayve’s autonomous tech will still have a human driver for now while the companies seek full approval for driverless rides.
Meanwhile, tech executives are pushing for lighter AI regulation. Nvidia’s Jensen Huang, OpenAI’s Sam Altman, Meta’s Mark Zuckerberg, and Elon Musk all urged G20 leaders to avoid limiting rules that could restrict the rapid growth of AI.
Microsoft is changing its reporting approach, from three segments to two: Agents and Infra, and Devices and Consumer, to reflect AI’s growing influence.
Ford is going after mainstream EV buyers with its new electric truck, the Ford Fathom. The company expects to sell 100,000 trucks in its first year, with starting prices around $30,000. Sales start next year.
European Data Ahead
European investors have a busy calendar ahead. Services PMI data is due from Spain, Italy, France, Germany, the eurozone, and the U.K. Other releases include Switzerland’s August inflation statistics and Q2 GDP, Turkey’s August CPI and PPI, Austria’s Q2 GDP, eurozone July PPI, and Germany’s ifo Economic Forecast.
These releases will give investors more insight into economic activity and inflation, as markets keep reacting to interest rates, energy prices, and geopolitical developments.
