Wall Street dips, oil continues climb ahead of US inflation data
A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 21, 2026. REUTERS/Jeenah Moon
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LONDON/WASHINGTON, Sept 10 : Nervy markets were waiting for key U.S. inflation data on Thursday after the ECB lifted its interest rates for a second time this year and oil held above $100 a barrel following U.S. and Iranian tanker missile strikes in the Strait of Hormuz.
Oil prices remained a concern for investors after Brent crude climbed above $100 a barrel on Wednesday for the first time since July, raising fears of renewed inflation pressure just as bond yields in major economies hover near multi-decade highs.
Wall Street opened the day lower again with the Dow Jones Industrial Average down 0.33 per cent in early trading. The S&P 500 dropped 0.56 per cent and the Nasdaq Composite fell 0.97 per cent. MSCI’s gauge of stocks worldwide was down 0.69 per cent.
The European Central Bank’s decision to raise its key interest rate to 2.50 per cent from 2.25 per cent on Thursday came as little surprise given the recent signals and barely moved the region’s stock markets [.EU] and the euro.
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Germany’s 10-year bond yield held at 3.45 per cent, the highest since the heat of the euro zone crisis in April 2011, while France’s OAT yield was at another post-2008 high of 4.35 per cent.
Away from the euro zone, the UK’s 10-year and 20-year yields bobbed near respective post-2007 and 1998 highs of 5.26 per cent and 5.87 per cent and benchmark 10-year U.S. Treasury yields ticked up to 4.91 per cent.
Investors were also digesting signs of looser U.S. fiscal policy after President Donald Trump promised to pay every U.S. adult a $5,000 “Trump dividend” if his party wins November’s congressional elections. The Treasury Department had also announced a $6 billion buyback of longer-dated U.S. bonds that disappointed some investors.
Attention will now shift to the U.S., where key inflation data ahead of a Federal Reserve rate-setting meeting next week could inform interest rate expectations. Markets are awaiting U.S. producer price index data due at 1230 GMT, followed by consumer price inflation data on Friday.
A majority of economists polled by Reuters expect the Fed to hold interest rates steady at its September 15-16 meeting and for the rest of this year.
OIL PRESSURE
In the commodity markets, Brent crude futures jumped another 3.8 per cent to $105 a barrel amid the re-escalation of the Iran war and as traders grappled with the prospect of yet more inflationary pressure.
“I think that Brent pushing through the $100 level will be seen by many in the market as a significant event in the current scheme of things,” said Nick Twidale, chief market strategist at ATFX Global.
Twidale said traders who had been holding off in hopes of a Middle East peace deal may now “hit the trigger as the realities of a longer conflict kick in.”
Investor attention will stay on the bond market. After the global selloff pushed 30-year yields to their highest level since 2007, Treasury Secretary Scott Bessent in August said that the government would increase buybacks of longer-dated bonds.
“Bessent has laid down the gauntlet to a group of sophisticated traders who don’t like to be told what to do,” said Matt Simpson, senior market analyst at StoneX.
“He may win a battle or two, but he’ll only win the war if bond traders let him.”
Source: Reuters
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