Bond yields jump, oil extends gains as US-Iran ceasefire expires
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Brent crude futures edged up 0.2 per cent to US$91.06 a barrel as trading resumed in Asia.
PHOTO: BLOOMBERG
- Oil prices rose and bond yields increased as the US-Iran ceasefire expired, with Iran shifting to a "fully offensive" military stance, raising global supply concerns.
- Asian stocks showed mixed performance, with South Korea's KOSPI up 3%, the Nikkei down 0.3%, and US futures flat amid renewed Middle East tensions.
- US Treasury yields hit multi-decade highs, reflecting bond sell-offs and uncertainty, while weak US economic data reduced expectations for imminent Federal Reserve interest rate changes.
AI generated
SINGAPORE – Bond yields climbed on Aug 18 to their highest in decades, with oil prices rising for a third day, while stocks gave up early gains in Asian trade as a US-Iran truce expired and Tehran threatened to adopt a “fully offensive” military posture.
The yield on the US 30-year Treasury bond rose as much as 1.1 basis points to an intraday high of 5.321 per cent, its highest in almost 20 years. Its 10-year counterpart traded up 0.4 basis point at 4.724 per cent.
“Typically, moves above 4.65 per cent for the US 10-year have been followed by some soothing words from the Trump administration, typically centred on an imminent resolution to the war with Iran,” ING analysts wrote in a note.
“This time, we’re not hearing the same,” they added. “In fact, the latest indications are for no imminent resolution as the shaky 60-day truce came to an end.”
S&P 500 e-mini futures slumped 0.2 per cent as MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.3 per cent, reversing early gains as stocks in Taiwan and China weighed on the benchmark.
South Korea’s KOSPI erased an early gain of more than 3 per cent as the Seoul market ended more than 1 per cent lower on Aug 18, while the Nikkei 225 fell by more than 2 per cent.
Brent crude futures gained for a third straight session, hovering around US$91 a barrel, as a rally in oil prices extended into a third consecutive day in Asian trade.
“The big focus in global macro is the increase and stickiness in longer-end developed market yields, and in particular a relentless sell-off in US Treasuries,” MUFG analysts wrote in a research report.
As the recent global sell-off in bonds deepened, the yield on the 10-year Japanese government bond rose 2 basis points to 2.94 per cent, a three-decade high.
Overnight on Wall Street, the S&P 500 slipped 0.5 per cent while the Nasdaq Composite edged 0.3 per cent lower as soft US economic data, including an unexpected drop in retail sales, led traders to reduce bets on an imminent Fed interest rate move.
“Markets adopted a generally risk-off tone as President Trump reaffirmed he was not interested in extending the truce with Iran,” Westpac analysts wrote in a research note.
The US dollar index, a measures of the greenback’s strength against a basket of six currencies, was up 0.1 per cent at 99.60, pulling back from a two-month low.
Gold was down 0.3 per cent at US$4,402.89, snapping a two-day winning streak.
In cryptocurrencies, bitcoin and ether were both down 0.3 per cent at US$64,159.76 and US$1,899.34, respectively. Reuters
